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Why Affiliates Are in Danger

Author: Ryan Healy   |   September 7th, 2011

If you’re an affiliate, you’re in danger.

In fact, you’re being attacked from two sides at the same time.

On the one side, you’ve got cash-strapped states (like California) trying to use affiliates to…

lay claim to more sales taxes. Companies like Amazon are quick to pull the plug on affiliates if states press the issue. Unfortunately, affiliate are caught in the cross-fire and often lose valuable sources of income due to the actions of greedy legislators.

On the other side, you’ve got companies who either delay payment of affiliate commissions or avoid payment altogether. I’ve personally found recent examples of “affiliate skimming,” non-payment of affiliate commissions, and other forms of commission theft.

Believe it or not, there is now a Facebook group that is dedicated solely to exposing companies that don’t pay their affiliates. The commissions owed are often $20,000 or more. Once a company stops paying affiliates, very few are ever able to collect the money owed to them.

How should affiliates respond? How can they protect themselves?

First and foremost, make sure you live in a state that is friendly toward small business — especially online businesses. When possible, avoid tax-hungry states like California, Illinois, and New York. If you live in a state that is hostile toward small business, it’s only a matter of time before your profits are pillaged (or cut off entirely).

Secondly, and almost as important, affiliates should do their due diligence and make sure they’re dealing with reputable affiliate programs before they join them. Because it’s not enough to refer a sale. You can’t count that commission until you’ve actually received payment by check or PayPal. Until you get paid, all you have is a “feel good” number in a digital ledger.

-Ryan Healy

P.S. One way to pre-screen affiliate programs is to reference the Paid On Time Affiliate Program Directory. Every program in the directory has agreed to pay their affiliates on time and abide by the Paid On Time Code of Ethics.

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