Sports AffCast – California Affiliate Nexus Workaround

by Wade_Tonkin on September 14, 2012

This week, I sat down with Rebecca Madigan, the Executive Director of the Performance Marketing Association.

Rebecca gave a brief history of the PMA and the use of affiliates by states looking to establish Nexus for online retailers.  We chatted about some of the legal principals involved, the court battle that the PMA waged in Illinois (and won pending appeal) and the current pending Nexus Laws coming into play in California and Pennsylvania.   The good news is that a workaround is in place for California that is pretty easy to take advantage of, even if it requires some paperwork on to be exchanged.   Rebecca explained that in reality, the California Board of Equalization was after Amazon’s sales tax revenue, and once they got this through an agreement with the state to build distribution centers and collect sales tax, they were in a mood to work with the PMA to protect affiliates with some restrictions.

Merchants who do not otherwise have Nexus in California will need to add language to their Affiliate Agreements specifying that affiliates cannot actively “solicit” business in California.  The language provided by the California BOE defines “solicitation” as :

The prohibited solicitation activities include, but are not limited to, distributing flyers, coupons, newsletters, and other printed promotional materials or electronic equivalents, verbal soliciting (for example, in-person referrals), initiating telephone calls, and sending emails.

Affiliates will then need to sign and annually file an Affidavit certifying that they haven’t participated in any of the prohibited marketing methods.

This will have some impact on California based affiliates if they follow the letter of the law as off-line promotion of affiliate offers as well as email marketing to California residents and telemarketing would be off the table, but California-based affiliates will still be able to promote merchant offers through links on their site, enhanced listings, etc.  as long as they aren’t specifically and actively targeting California residents.

You can download the paperwork involved from the Department of Equalization at http://www.boe.ca.gov/pdf/boe232.pdf

For more info on Affiliate Nexus issues, please visit www.performancemarketingassociation.com

Wade Tonkin is the Affiliate Manager at Fanatics LLC.   He currently runs the affiliate programs for the official online stores of the NBA, NFL, NHL and NASCAR on the PepperJam affiliate network.    You can follow Wade on Twitter at @affile8warrior.

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