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3 Jan 2001, France

Hello and thanks for the great site you've got...

Just a question quite precise about affiliate programs...

What is the legal status of the affiliate? Does he become a merchant joining an affiliate program? Can someone under 18 earn money from affiliate marketing???

Thank you

Happy Electronic Millennium

Patricia

Dear Patricia:

Sorry for the delay. I put your question to Matthias Sonntag of the Institute for Information, Telecommunications and Media Law, University of Munster and the legal team at Center for Law, Commerce, & Technology, University of Washington School of Law in order to get an American and European perspective on your question.

Matthias replies...

"The legal status of the affiliate depends on the terms of the agreement underlying the respective affiliate program. Up to date, it is not clear what kind of contract the agreement is. In my opinion the affiliate can not be regarded as a merchant since affiliate programs seems to be like some sort of sponsoring. Consequently, under German laws, an affiliate needs no trading licence. Anyway, the revenues generated from affiliate programs are in general not sufficient to earn someone's living.

Most national laws provide for some level of less protection of minors. For example, under the German Law a minor can conclude a binding contract as long as the deal is advantageous for him in both ways, legally and economically. Affiliate programs which fall in this category (which is not the case where the company introduces an exclusivity clause in the agreement) allow the minor to generate revenues from affiliate programs."

And the legal team at the Center of Law Commerce and Technology say...

"While the center cannot tell you what action to take or otherwise give
legal advice, we'd be more than happy to point you to resources on the
Web that can assist you and possibly answer your questions. Should
you require legal advice, please consult an attorney. While we cannot
vouch for the accuracy of the web, we have located some web-sites that
may be of interest to you.

The precise nature of the affiliate in an affiliate program is as variable as the affiliate programs that exist on the web.

For some general information about affiliate programs and the do's and
don'ts see

http://www.affiliateadvisor.com/top10.htm

There is also an e-groups discussion list on the topic of affiliate programs

http://www.egroups.com/group/affiliate-l

Some affiliate programs are 'refer-a-friend' programs that give a bonus or credit to existing subscribers who refer their friends. These programs often do not mention the precise relationship between the affiliate and the main merchant, and they may or may not have age requirements on who can be a general subscriber (and therefore, presumably, also a referrer.) For examples, see paypal.com and @Home.com's referal terms:
https://secure.paypal.com/cgi-bin/webscr?cmd=p/gen/referral-terms-outs
ide and http://www.home.com/friend/rules.html

Sometimes, other agreements, such as the subscriber agreement for the
@home service, do specifically state the nature of the relationship.
See http://home-members.excite.com/m_policies/attleasedmodem.html (See 11.d. "No Relationship")

In regards to age, Paypal does not exclude children, but merely requires they "represent that they are using the service with the consent of their parent or guardian."
http://www.paypal.com/cgi-bin/webscr?cmd=p/gen/terms-outside

Other affiliate programs are of a 'percent-profit-for-referring-click-throughs-that-lead-to-sales' arrangement.

Amazon.com is a good example of this. For a full description see:
http://www.amazon.com/exec/obidos/subst/associates/join/associates.htm l/ref= as_gw_bt/103-9618212-6380607

Their program also sets out the precise nature of the relationship; in
Amazon's case, independent contractors.
http://www.amazon.com/exec/obidos/subst/associates/join/operating-agre ement. html/103-9618212-6380607 (see 15. Relationship of Parties)

Some other affiliate programs are primarily 'ad-revenue-sharing' in
nature. It is sometimes difficult to distinguish between this type and
the previous type, but generally, affiliates get a pro-rata portion of
the advertising income for linking, viewing, or clicking-through to
another web site. Two examples are alladvantage.com (some relationship
limitation, only parental consent) and fastclick.com (express
relationship limitation, no-one under 18)

http://www.fastclick.com/pub/pub_agmt.html (see section 5.
Applicability) and https://www.alladvantage.com/vbagreement.asp?refid=#relationship (not
employer-employee)

While the Center of Law, Commerce & Technology doesn't have extensive knowledge of the subject, many 'adult' or X-rated web sites use this type of arrangement to drive traffic to their sites. (Some people suggest that this, like many other types of internet marketing now in use today, started in the 'adult' industry.) Presumably these affiliate programs would have age requirements.

Since affiliate programs involve the exchange of money, a good first clue is to look at how the money might be taxed, as income, commission, salary, profits, advertising expenses, or in some other way. AllAdvantage specifically addresses this for Swedish and Australian residents. See the 3rd and 4th paragraphs at: https://www.alladvantage.com/vbagreement.asp?refid=#relationship

In conclusion to the issue of age, many of the relationships seem to
be based on a contract (whether express or implied) and so it is worth
considering whether or not the affiliate can legally enter into a
contract. The age at which a contract is enforceable does vary.
Compare the generally higher ages of Japan to the United States, for
example.

So, while the relationships seem to vary, an important consideration would be what weight a court might give to the relationship named in a contract in determining the ACTUAL relationship. Most courts (particularly under common law) can look to the actual behavior of the relationship and disregard the label the contract gave the relationship if it is deceptive or clearly untrue. If one party really is employing another, a court might disregard language suggesting an 'independent contractor' status."

And if that doesn't answer your question, I don't know what would!

Good luck,

Dr. Ecommerce