The Top 20 Mistakes
Affiliate Businesses Make
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www....
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Those who cannot remember the
...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
But….
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
You are not doomed.
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Let’s learn from the past.
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
These are the Top 20 Legal Mis...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #1: Not treating your
...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #2: Not having the rig...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #3: Affiliate Networks...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #4: Affiliates operati...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #5: Failing to underst...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #6: Failing to underst...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
An important reminder...
Intel...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #7: Not being honest w...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #8: “Free” Trials
The ...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #9: Spamming
The Fix: ...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #10: Bad AdWord
Campai...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #11: Using Another’s P...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #12: Merchants that do...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #13: Networks that do ...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #14: Affiliates that d...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #15: Protect yourself ...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Update!!!
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Update!!!
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #16: Protect yourself ...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #17: Not paying attent...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #18: Watching for dedi...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #19: Not utilizing bes...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Mistake #20: Being afraid to a...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Just do it -
• Check the claim...
1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182
(703) 288-2800 | www.fednexuslaw.com
Fed Nexus Law f/k/a Centre Law...
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The Top 20 Legal Mistakes Affiliate Businesses Make

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This presentation is from Affiliate Summit East 2014 (August 10-12, 2014 New York City).
Session Description: The session will focus on building a legally compliant affiliate business from the ground up through examining 20 common legal mistakes affiliates and networks make using real world examples.

Published in: Marketing
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The Top 20 Legal Mistakes Affiliate Businesses Make

  1. 1. The Top 20 Mistakes Affiliate Businesses Make 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Tuesday August 12th from 2:00 – 3:00 Eric S. Crusius, Esq. Partner at Fed Nexus Law crusiuse@fednexuslaw.com
  2. 2. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Those who cannot remember the past are condemned to repeat it. -George Santayana in 1905
  3. 3. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com But….
  4. 4. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com You are not doomed.
  5. 5. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Let’s learn from the past.
  6. 6. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com These are the Top 20 Legal Mistakes Affiliate Marketers Make
  7. 7. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #1: Not treating your business like a business. The Fix: incorporate. For a small sum, incorporation usually allows an individual to escape liability. Caveat: Treat your business as a separate entity. If not, courts may still hold you personally liable.
  8. 8. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #2: Not having the right contracts. The Fix: • Affiliates should have contracts with their networks to understand the parameters of what they can do. • Networks should have contracts that protect them from affiliates (not that they need it!) • Do not be afraid to negotiate and make sure every contract is read to ensure there are no trap doors. Caveat: Each situation is different, so it may make sense to have your contract reviewed by a lawyer.
  9. 9. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #3: Affiliate Networks operating without contracts. The Fix: Affiliate networks should have three categories of contracts in place: 1. Website contracts that outline terms and conditions and privacy policy; 2. Contracts with merchants that outline use of merchant’s intellectual property – how and when merchant’s text, photos, logos, etc. can be used; try to avoid blame for legal wrongs by affiliates; set payment conditions; and 3. Contracts with affiliates that ensure there is no liability for affiliate wrongs; pass down terms from merchants; govern how affiliates advertise.
  10. 10. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #4: Affiliates operating without contracts. The Fix: Affiliates should have three categories of contracts in place: 1. If applicable - website contracts that outline terms and conditions and privacy policy; 2. Contracts with networks that governs how affiliates can utilize intellectual property – how and when text, photos, logos, etc. can be used; network/merchant may try and obtain indemnification for legal wrongs; set payment conditions; and 3. Contracts with 1099 workers or consultants.
  11. 11. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #5: Failing to understand proper trademark use. The Fix: Take a crash course in what trademarks are and what they mean and how to use them. 1. Network/Merchant – Affiliate contracts should have how and when to use the trademark; and 2. Affiliates should review their contracts to ensure they are using trademarks properly. A Deeper Look: trademarks include logo, name, and trade dress. Violating a trademark can lead to significant statutory damages.
  12. 12. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #6: Failing to understand proper copyright use. The Fix: Take a crash course in what copyrights are and what they mean and how to use them. 1. Network/Merchant – Affiliate contracts should have how and when to use text and pictures; and 2. Affiliates should review their contracts to ensure they are using text/pictures properly. A Deeper Look: copyrights are text, pictures, images, etc. Significant statutory damages available though work is considered copyrighted upon creation; easy to register a copyright; beware of DMCA Takedown Notices.
  13. 13. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com An important reminder... Intellectual property is everywhere. Every word written and every photograph taken is automatically and instantaneously protected by copyright. Whether registered or not, logos could be protected by copyright law.
  14. 14. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #7: Not being honest with advertising. The Fix: Carefully vet claims (and venue of claims) made with advertisements. Otherwise the FTC may take notice. Among other things, the FTC monitors advertising claims made by affiliates, networks, and other marketers. Avoid trouble – no deceptive formats (fake news stories), no false endorsements, no unsubstantiated claims.
  15. 15. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #8: “Free” Trials The problem: often state attorneys general get complaints about free trial “scams.” There are 50 state AGs out there, so beware. The Fix: Carefully and boldly lay out free trial terms and conditions. Is a return necessary to avoid a credit card charge? Is it easy to return a product? Are toll free lines staffed adequately?
  16. 16. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #9: Spamming The Fix: The CAN-SPAM Act has certain requirements that need to be followed. The FTC seeks out CAN-SPAN violators and “damages” can be extensive. CAN-SPAM requirements include accurate subject lines, the ability to opt-out, and using e- mail addresses to send obtained with false information.
  17. 17. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #10: Bad AdWord Campaigns The Fix: AdWords have been the subject of a lot of confusion. Be sure not to use another’s TM when drafting AdWords and other similar advertisements. The Caveat: some courts have ruled using a TM as a keyword is okay. Check with your attorney prior to doing that, however. One thing that is not right: using another’s TM in your advertisement.
  18. 18. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #11: Using Another’s Photos The Fix: Use your original photos or get permission from another to use their photos. Additional Background: photographers and copyright holders are aggressive. Straight product photos are often copyrightable. Violations of the Copyright Act can result in statutory damages and attorneys fees.
  19. 19. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #12: Merchants that do not understand their risks The Risks: • Networks and affiliates violate various laws • Networks and affiliates misappropriate merchant’s IP • Networks and affiliates draw the ire of the FTC • Product does not function properly • Product does not work in accordance with claims made by advertisers The Fix: • Have iron-clad contracts with networks and/or affiliates. Include indemnification if possible (though may not be effective). • Monitor networks and affiliates to ensure they are compliant with various laws and are in compliance with agreements. • Research in who is used as network partner. Do they have a good compliance history?
  20. 20. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #13: Networks that do not understand their risks The Risks: • Networks are sometimes caught in the middle and catch the worst of both worlds. • Affiliates can violate various laws • Affiliates can misappropriate merchant’s IP • Affiliates can draw the ire of the FTC • Merchant’s product does not function properly • Merchant’s product does not work in accordance with claims made by advertisers The Fix: • Have iron-clad contracts with merchants and/or affiliates. Include indemnification both ways if possible (though may not be effective). • Monitor affiliates to ensure they are compliant with various laws and are in compliance with agreements. • Research in who is used as affiliate. Do they have a good compliance history?
  21. 21. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #14: Affiliates that do not understand their risks The Risks: • Unaware of federal and state laws that govern permissible actions • Can unwittingly misappropriate merchant’s IP • Can unwittingly draw the ire of the FTC • Merchant’s product does not function properly • Merchant’s product does not work in accordance with claims made by advertisers The Fix: • Understand contract signed with merchants and networks. Have a list of what you can and cannot do. • Evaluate a contract before signing it. Would you prefer tow walk away? • Try to negotiate “terms of contention.” • Ensure product claims are accurate. • Evaluate each advertisement to ensure compliant with best FTC practices and CAN-SPAM practices.
  22. 22. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #15: Protect yourself from the enemy within The Risks: companies of all shapes and sizes are vulnerable to rogue workers or even business partners. For instance, Rogue employees and business partners who steal trade secrets (NDA), attempt a “corporate takeover,” engage in cyber attacks and hacking, try to misappropriate corporate property, and go loco. The Fix: be vigilant and have the proper agreements in place.
  23. 23. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Update!!!
  24. 24. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Update!!!
  25. 25. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #16: Protect yourself from the external enemies The Fix: Yelp! And other review websites provide ample opportunities for those to lodge complaints. Monitor those websites and others in addition to performing vanity searches. The $$$ Fix: some website such as Rip-Off Report require payment of $$$ to investigate claims that can result in a softer edit of the complaint. Attempts to sue ROR have been unsuccessful.
  26. 26. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com
  27. 27. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com
  28. 28. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #17: Not paying attention to Google Auto-Complete
  29. 29. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #18: Watching for dedicated “hate” websites
  30. 30. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #19: Not utilizing best practices • Train your employees • Register your name at social media websites • Register your name for common TLD extensions • Register your copyrights and trademarks • Monitor Google and other search engines • Engage with complaint websites
  31. 31. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Mistake #20: Being afraid to ask for help Most lawyers will talk to you for free to help you scope out a problem. Take advantage of that!
  32. 32. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Just do it - • Check the claims that are being made – are they accurate; • Monitor compliance by upstream and downstream partners/parties; • Do random Internet searches; • Ensure how claims are framed does not run afoul of the spirit of the FTC regulations; • Handle defamation on the Internet immediately; • Check to make sure IP is being respected; • Have agreements with all partners; • Check rights and responsibilities in all contracts and make cheat sheet bullet list to use on daily basis; and • Check state regulations – there are 50 state AGs!
  33. 33. 1953 Gallows Road, Suite 650 | Tysons Corner, VA 22182 (703) 288-2800 | www.fednexuslaw.com Fed Nexus Law f/k/a Centre Law Group 1953 Gallows Road, Suite 650 Vienna, Virginia 22182 (703) 288-2800 Website: www.centreinternetlaw.com Blog: www.internetlawforbusinesses.com E-Mail: crusiuse@fednexuslaw.com Tweet! @InternetBizLaw
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