The Following Blog Posts Contain Information Related To:
DMCA Safe Harbor Registration Deadline Is Fast Approaching
Originally Posted: Monday, November 28th, 2016
Do you want to be held responsible for other people’s intellectual property missteps? No? Then register for the DMCA Safe Harbor program at dmca.copyright.gov by December 31, 2016. People who previously registered by mail must re-register using the online system. Need help? Contact Kelly / Warner.
Mandatory Online Registration For DMCA Safe Harbor Program
The U.S. Copyright Office changed the DMCA agent registration process. Previously, online service providers could mail in their registration requirements. Not anymore.
By December 31, 2016, all parties wishing to maintain their safe harbor status must register using the online system at dmca.copyright.gov.
The DMCA Safe Harbor Provision
The Digital Millennium Copyright Act (DMCA) governs online intellectual property in the United States. Section 512(c), commonly known as the “Safe Harbor” program, outlines how ISPs can protect themselves from third-party intellectual property liability.
To put it another way, the DMCA Safe Harbor program is why authorities don’t punish Google when *John Doe* posts a pirated film on YouTube.
DMCA Designated Agents
The DMCA Safe Harbor program isn’t an automatic protection bestowed on all websites. To qualify, every three years, ISPs must formally designate and register an agent — typically an attorney — who acts as the receiver for all site-specific intellectual property notifications and takedown requests.
What happens if you don’t register a DMCA agent? Authorities could hold you responsible for users’ intellectual property foibles. So, if you’re an OSP, and you don’t want to pay the price for users’ actions, register for the DMCA Safe Harbor program.
Social Media Marketing Maven: Chrissy Teigen
Originally Posted: Monday, November 28th, 2016
When she’s not lip sync battling, Chrissy Teigen apparently ponders social media marketing mysteries! Recently, the brand influencer Twitter-shared some musings about FTC advertising compliance.
Chrissy Teigen is serious about her online marketing work and keeps up-to-date with FTC regulations. We say, “Good on her!” Every influencer should familiarize themselves with Federal Trade Commission compliance standards.
Chrissy collaborates with brands to draft promotional tweets.
Promotional Hashtags: Influencers, marketers, and brands are expected to use #ad, #spon, #sponsor, or #paid in promotional tweets, ‘grams, and other social media posts.
Disclose Material Relationships: Read the Dot Com Disclosures to determine the necessary promotional declarations for your product. Don’t want to wade through an FTC regulatory document? Click here for the most important points.
Be Mindful of Promotional Language:Don’t lie about product benefits; don’t fib about ingredients; don’t rely on questionable scientific studies to support claims. The FTC has — and will continue to — sue over these types of infractions.
Twitter, Facebook, and Instagram promotions are ubiquitous, but online marketing regulations are still nascent. Please don’t misunderstand the assertion. Regulations DO exist; brands risk sizable fines for shirking guidelines. And even though the FTC has earned a reputation for, shall we say, mutable justice… consistency has, over the past year, quietly snuck its way into the investigation equation.
Want to evade the FTC’s prying eyes? Clean up your marketing compliance house.
Alas, dear writers, there is an exception: ebooks!
Since Gutenberg first pimped his press to the public, authors have given out free advanced copies in exchange for reviews; the practice is the publishing industry’s primary marketing artery. (Think about it: Who would’ve plunked down dimes for the then unknown Thoreau’s Walden, if it didn’t include a forward by his bud, the popular Ralph Emerson?)
How can sellers leverage the ebook exemption in Amazon’s discount-for-review policy? It depends on the product. For example, service providers reliably attract new clients by developing niche ebooks. Ask yourself: Can you do the same for your product?
Ebook Business Performance News: Digital v. Paper Pricing Wars Lumber On
For years, paper publishers and Amazon have unwittingly found themselves in a polygamous marriage. Sure, certain benefits keep them happily bound (Amazon is the country’s largest book distributor), but the relationship is also plagued with heaps of jealousy, resentment, suspicion, and, of course, power struggling.
The Brinkmanship Of Book Pricing
It all started when Amazon successfully hooked readers on ebooks, and the paper-book market took the bullet; bookstores were lined up in front of a firing squad.
But traditionalists fought back. In an arguably injudicious move — which perhaps revealed the old-industry-guard’s detrimental and intractable shortsightedness — the paper publishers sued for the right to set ebook pricing…and won.
But it was a Pyrrhic Victory, of sorts.
Because Amazon buys books at wholesale and still controls paperback / hardback pricing on the site. So, when the publishers hiked ebook costs, Amazon started pushing paper books at a lower-than-retail cost. And now, according to a recent article in Tech Crunch, ebook sales are down 22.7% compared to 2015. (Ay, Dios libro! Can’t the publishers all just get along!?)
Nice To Meet You
Self-published authors regularly become entangled in intellectual property confrontations; plagiarism is also a big problem — as are writers who deploy phony defamatory reviews to disparage competitors.
We help authors overcome these obstacles. If you’re grappling with an online publishing business or legal problem, we’re here to help. Get in touch; we’ll chat and come up with solutions to your ebook business challenges.
Cyberbullying Case Summary: Fatal NJ University Incident
In 2010, Rutgers University student Tyler Clementi tragically jumped to his death after learning his roommate, Dharun Ravi, secretly recorded footage of him kissing another man, and then posted it online.
The State of New Jersey used bias intimidation laws to prosecute Ravi (State of New Jersey vs. Dharun Ravi) in the seminal cyberbullying case. In 2012, a court convicted him on 15 counts. Ravi “was sentenced to 30 days in jail, 3 years probation, 300 hours of community service, a $10,000 fine, and counseling on cyberbullying and alternate lifestyles.”
Judge Ordered Retrial
In 2015, however, New Jersey’s Supreme Court put an end to the state’s bias intimidation law, declaring it unconstitutional. The legal dominoes fell, and in 2016, an appeals court ordered a new trial, since four of Ravi’s counts stemmed from an unconstitutional edict.
Despite the decision, judges in the cyberbullying case emphatically condemned Ravi’s actions and presented an emotional opprobrium:
“The social environment that transformed a private act of sexual intimacy into a grotesque voyeuristic spectacle must be unequivocally condemned in the strongest possible way. The fact that this occurred in a university dormitory, housing first-year college students, only exacerbates our collective sense of disbelief and disorientation.”
Interested in reading more cyberbullying case studies? Click here.
Online Gaming Threats: Chat Ultraviolence Leads To Jail
Originally Posted: Wednesday, September 7th, 2016
Can you land in legal trouble over online gaming threats? Let’s talk about the issue for two minutes.
Can I Go To Jail Over Aggressive Smack Talk During Online Game play?
Law enforcement officials treat criminal threats like the Supreme Court treats the Constitution — seriously. Plus, FBI identity and tracking tools can smoke the average person from a digital foxhole fairly easily.
How much time could you catch, if caught? Bodily harm threats could fetch a five-year prison sentence; property damage, two years.
When Does Trash Talking Become An Actionable Threat?
The second someone implies, or outright threatens to abuse, rape, stalk, hit, or kill, the legal line has been crossed. Play it safe: keep your smack talk about the match.
Some people make good on their threats. If anybody starts polluting chats with creepy posts, pick up the phone and call your local precinct; they’ll hook you up with the nearest FBI contact, who willtake the matter very seriously.
Unsolicited advice nugget: if you plan to go pro, there’s a worldwide audience to worry about. Past statements can — and often do — come back to haunt — especially in today’s digital thunder dome. Don’t let online gaming threats destroy your career.
Can you give me an example of someone who has been arrested for online gaming threats?
Authorities arrested a 28-year-old Heroes of the Storm player (who allegedly also runs a Facebook account called ‘tedbundyismygod1’) for littering the game’s chat — and his Facebook — with ultraviolence threats including:
“I will bomb the new york twin towers [sic]”
“You make me want to shoot up an elementary school;”
He also threatened to “rape and kill” children.
Other players reported the disturbing posts on July 7th; by July 12th, authorities had the alleged culprit in custody.
What should I do if someone threatens me, via chat, during a match?
The same rules apply to online gaming as they do airports: If you see something, say something!
Let’s be frank: unhinged people carry out threats. If somebody starts polluting chats with creepy posts, pick up the phone and call your local precinct; they’ll hook you up with the nearest FBI contact, who will take the matter very seriously.
The Legal Lowdown On Pokémon Go Lawsuits & Marketing Tactics
Originally Posted: Tuesday, August 30th, 2016
The micropayment miracle, Pokémon Go (PoGo), currently holds the prize belt for “most popular game of all time,” and in short few months, it’s raked in over $210,000,000. Market experts expect revenues to hit $1.1 billion by year’s end, and savvy brick-and-mortar businesses are PoGo promoting — to huge success.
But, dear reader, don’t be lulled into submission! The Pokémon Go story is NOT all smiles and profits. [DUN, DUN, DUN!]
Oh yes, there’s the dark side of Pokémon Go. The side that’s spawned a PoGo disaster map; the side that’s raised get-off-my-lawn stakes to lawsuit level; the side that has people wondering, “Can I sue Pokémon or Nintendo for injuries sustained in the line of PoGo battling!?”
Is Pokémon Go ushering innocents down a dangerous personal injury path? And if so, can the game’s maker be held liable? Moreover, what legal aspects must be considered when promoting a business through PoGo?
Let’s examine this mobile gaming phenomenon, with legal scalpels.
Pokémon Go Lawsuits
Nintendo aims to “put smiles on people’s faces.” Yet, not every civilian is grinning over Pokémon Go. In fact, two households have definitely NOT caught the PoGo craze; instead…they’re filing Pokémon Go lawsuits — alleging nuisance and unfair enrichment.
Get Of My (St. Claire Shores, Michigan) Lawn
The Place: Wahby Park, St. Claire Shores, MI. A point of pride in a middle class enclave, Wahby is a public recreation area that doubles as a Pokéstop and Poke gym.
The Problem: People who live near Wahby aren’t happy. They claim Poké players are driving on private lawns, parking on public streets, tearing up gardens, and…looking at them! One resident lamented, “I don’t feel safe sitting on my porch!” Another referred to the situation as “a nightmare.” Someone else said she was “afraid to go to sleep,” and a man cursed his lack of prescience, lamenting: “If I knew [Pokémon Go] was coming, I’d have sold my place two months before it got here!”
An online anti-PoGoer warned the game was “ruining the quality of life for many Americans,” and a seemingly committed jingoist, who clearly isn’t a free market proponent, cautioned, “It’s a form of destrictive [sic] society, designed by the Chinese. And it’s a shame [Pokémon Go Players] have the power to vote, because it seems that they are easily brain washed. Which could lead this country to it’s [sic] destruction.”
Local Solutions?: Several residents near Wahby Park did seek redress with the city council — and the council did take steps to remedy the situation, like increasing signage, blocking off private roads, and increasing nightly police patrols. Apparently, however, the measures didn’t satisfy one couple who is moving forward with a Pokémon Go lawsuit.
The Lawsuit: One of the disrupted homeowners is suing Niantic, Inc., The Pokémon Company, and Nintendo Co. Ltd. for “nuisance and unjust enrichment.” Why unjust enrichment? Well, the plaintiffs feel that their lawn, being so close to a public park, has helped PoGo become a financial phenomenon. Plus, the lawsuit “seeks to stop designating GPS coordinates on or near private properties without permission.”
Local Opposition: Some Whaby Park Pokémon players are side-eyeing the plaintiffs. One young father interviewed for a local television station explained his viewpoint:
“For the majority, for the mass populous that comes here to play Pokémon, they’re here to have fun and enjoy the nature and meet cool people. We’re not trying to trespass anybody.”
Likely Outcome: Will the homeowners win? Believe it or not, they have a sliver of a shot. There’s a legal standard known as the “attractive nuisance doctrine,” which says homeowners can be held liable for a child’s death or injury if:
The landowner keeps something potentially dangerous on their property (i.e., broken car on lawn, trampoline, pool without fence (in some jurisdictions)).
The landowner knows children are around who might trespass.
The landowner knows that something on their property may endanger trespassing children.
The children are too young to recognize the risk.
The landowner can fix the problem at a reasonable cost.
The landowner does nothing.
Now, this lawsuit isn’t directly related to children harmed by Pokémon Go, but attorneys could argue that Niantic and Nintendo should have foreseen PoGo’s negative consequences. It’s a stretch, but not an impossibility.
That said, PoGo’s terms of service includes an arbitration clause that, in part, reads:
“[D]isputes between you and Niantic will be resolved by binding individual arbitration, and you are waiving your right to trial by jury or to participate as a plaintiff or class member in any purported class action or representative proceeding.”
Does that mean nobody can ever sue Niantic or Nintendo? Nope. Because also embedded in the ToS is a stipulation allowing customers to opt out of the arbitration clause, via email, within 30 days of downloading.
So, bottom line: who will likely win this Pokémon Go lawsuit? If we’re hypothetically trading Vegas odds, then sure, Niantic and Nintendo probably win this one. But you never know. At this point, we cab only be sure that the Courts and clerks are tackling the issue.
Pokémon Go Marketing: Ideas & Legal Considerations
Marketing gurus agree: If you’re a brick-and-mortar business that isn’t using PoGo to lure customers (pun intended), then you’re missing out on…well…money. As one Reddit user urged, “[Using Pokémon Go to promote] is the greatest investment you can make right now.”
So, how are business owners putting PoGo to work?
Bars, pubs and restaurants are becoming Poké gyms, then offering discounted drinks for members of the team that holds the gym.
Animal shelters are encouraging people to pick up dogs to walk while they’re out for Poké play, which has led to an increase in pet adoptions (Nice!).
Creating power stations for “phone refueling.”
Following the game and using social media to advertise when a rare Pokémon is in an establishment.
Are the promotions working? Heck yeah! As another Reddit user succinctly said, “[Pokémon promotions brought him] SO. MUCH. FOOT. TRAFFIC.”
“Put down a lure and watch the customers flow in,” advised another.
Tips To Avoid Pokémon Marketing Pitfalls
Account Security: Pokémon Go registration means handing over access to your entire Google account. Though Niantic does a wonderful job at keeping secure, the threat of a breach still lurks. Consider creating a new e-mail for your Pokémon Go marketing efforts in case disaster does strike.
Malware Concerns: Malware is starting to spread throughout the Pokéverse. Avoid risk by downloading from a reputable source.
Play Nice: Don’t try to sabotage a competitor’s PokéMojo. What do we mean? The app includes a Pokéstop and Poké gym removal form. So, let’s say Frank is in direct competition with Mary. They both own and operate ice cream parlors on Main Street. Being a gamer, Mary adopted Pokémon Go early and started using it to promote her business. It didn’t take long for her shop to become both a Pokéstop and a Poke gym. Frank, saw the amount of foot traffic Mary’s Poké-efforts garnered — and he didn’t like it. One day, when feeling particularly spiteful, Frank decided to sabotage Mary’s success by submitting a Pokéstop / Poké Gym removal request for Mary’s business. Frank’s actions could be considered unfair and deceptive marketing, and he could be fined — heavily — by the FTC. (And so can you, if you “pull a Frank.”)
Expect to read a lot about Pokémon Go lawsuits over the next several months. But the question remains: will the PoGo craze outlasts the lawsuits it spawns? Only time has the answer.
Internet Law 101: Virus Spoofing Can Cost Millions
Originally Posted: Wednesday, August 24th, 2016
Is virus spoofing against regulations? You bet your spam it is. What are the consequences for getting caught? The FTC could force you to fork over millions, which has the power to extinguish an operation.
What Is Virus Spoofing?
Virus spoofing is the act of tricking someone into thinking their computer is infected. Spoofers typically dispatch pop-up warnings onto machines.
The pop-ups can be convincing and usually direct people to buy anti-virus programs. Sometimes the program is completely worthless; other times it works, but is needless. Whichever the case, it’s considered unfairly manipulative and contravenes marketing regulations.
Who Has The Authority To Sue Over Virus Spoofing?
The Federal Trade Commission (FTC) is the nation’s consumer watchdog. Established in 1914, the agency initiates marketing investigations against businesses and individuals — a privilege outlined in the Federal Trade Commission Act.
Attorneys general can also sue over such scams.
Why Is It An Actionable Offense?
The Federal Trade Commission considers Virus spoofing unfair and deceptive marketing, and therefore actionable under the FTC Act. In a recent case, the FTC explained that the defendant “subjected [consumers] to high-pressure deceptive sales pitches for tech support products and services.”
State of Federal Offense?
Deceptive spoofers can face both federal and state punishments.
Accused Of Virus Spoofing?
Has someone accused you of virus spoofing? Next question: “Did you do it?” If yes, contact a lawyer and explain the situation. (Don’t worry; he or she isn’t going to judge you.)
In the best case scenario, your lawyer will be able to loophole you out of the predicament. If not, he or she may be able to diminish the financial blow. Lawyers in this niche know how to negotiate with the FTC, navigate the investigation, and secure settlements with little fanfare (to reduce negative press).
Ready To Consult With An Internet Law Attorney Who’s Dealt With Virus Spoofing Investigations?
If you’re reading this post, there’s a chance you may be on the FTC’s radar. A word of advice: ignoring the issue won’t make it disappear.
But we can help.
Get in touch today; and together, we’ll start solving problems, instead of letting them fester. Let’s talk.
International Defamation: China’s Strict Internet Publication Law
Originally Posted: Friday, July 22nd, 2016
Chinese officials adopted a new online publication law. When asked about the statute, President Xi Jinping opined:
“China must improve management of cyberspace and work to ensure high-quality content with positive voices creating a healthy, positive culture that is a force for good.”
What You Need To Know About China’s New Internet Publication Law
Called the Online Publishing Service Administrative Rules, the new law went into effect on March 10, 2016.
“Internet publication” is vaguely defined; anything posted online could, theoretically, fall under the statute’s reach.
The law established a departmental hierarchy for monitoring and reporting on “publishing service providers.”
The country’s media industry will likely be encouraged to participate in “professional training and evaluation.”
Under the law, content providers may have to obtain a Publishing Service License, for which the application process is expected to be long and nuanced.
The new Internet publication law forbids online content that “opposes the principles of the Constitution, threatens national unity, sovereignty or territorial integrity or security, divulges state secrets, damages the reputation or interests of the state, incites ethnic hostility or discrimination, endangers social morals or ethnic cultural traditions, advocates heresy or feudal superstition, disseminates rumors, disturbs social order and stability, disseminates obscenity, pornography, gambling, violence, or incites crime or insults others or infringes on their legal rights and interests.
Who Will Be Affected By China’s New Internet Publication Law?
China’s new regulation will mainly affect online media outlets and businesses in Asia. To be safe, any American outfit with Sino-marketing appendages should familiarize themselves with the PRC’s new publication standards.
Western bloggers that cover Asian politics and business should also be on alert.
China Is Crystal Clear: Bye, Felicia Foreign Media
China’s latest move reinforces its efforts to limit “foreign investment into the country’s online publication’s industry.” Apparently, both iTunes and Disney have already been affected by the recent statute.
Contact An International Defamation & Internet Law Attorney
Since opening our doors, the lawyers at Kelly Warner have worked with clients and firms from around the world. Internet law is an international matter, and we always keep the global picture in mind.
To learn more about our international defamation and Internet law practice, click here. If you’re ready to talk, let’s do it.
Shira, D., & Associates. (2016, May 17). Internet Censorship and China’s New Online Publication Law – China Briefing News. Retrieved July 21, 2016, from http://www.china-briefing.com/news/2016/05/17/internet-censorship-chinas-new-online-publication-law.html
Yes, Amazon Sues Fake Reviewers
Originally Posted: Wednesday, June 8th, 2016
Online Marketing Legal Reminder: Avoid using and writing paid reviews for Amazon.com. Why? You could be sued or banned!
Amazon is cracking down on phony feedback. Not only is it suing fake review services, but also suspending complicit seller accounts. In fact, just the other day, Amazon announced a lawsuit against a group of third-party sellers who used “sock puppet accounts” to post phony, positive reviews on their product pages.
“We will continue to pursue legal action against the root cause of reviews abuse — the sellers and manufacturers who create the demand for fraudulent reviews, as well as the ecosystem of individuals and organizations who supply fraudulent reviews.”
Ongoing Dragnet Against Fake Review Services
Amazon is obsessed with review integrity because customer posts fuel the e-commerce engine. To that end, last year, the company litigiously targeted parties that allegedly contributed to review corruption. Since then, the online retail giant has targeted about one-thousand phony feedback operations and forced many offline.
Is Amazon’s Review Integrity Initiative Working?
Are Amazon’s attempts to stomp out phony feedback working? Depends on how you assess the situation. Sure, more people now know about the company’s anti-fake review stance, prompting some marketers to stop using them. But, due to the pop-up-shop nature of review services, attempts at extermination have ultimately proven to be whack-a-mole level frustrating.
Need Help With An Amazon Review Problem?
User reviews are essential to the e-commerce success formula. For sellers, the quality and quantity of customer feedback can mean the difference between success and failure.
And unfortunately, unscrupulous marketers use disparaging reviews as a negative SEO tactic.
If you’ve been hit, and you’re ready to right a wrong, get in touch immediately. Our team of attorneys and techs has helped tons of people and businesses overcome various review issues. We can help you, too.
Don’t wait. The longer phony reviews fester, the more damage they can do.
Get in touch immediately to get back on a profitable path, free of fake review problems.
Native Advertising Rules Are Now In Effect (And The FTC Is On The Hunt)!
Before the release, websites profited from native advertising blocks that fell under headlines like “Promoted Content” — basically, headers that disguised links as internal links. Or, to put it another way, click bait.
However, despite the regulation’s release, Adweek recently reported that about 70% of websites using native advertising are flouting FTC guidelines.
So, what happens if officials catch you snubbing online marketing rules and regulations? Well, they can sue you, fine you and make you pay.
Native Advertising Startup Opportunity Alert!
Another interesting tidbit to pop out of Adweek’s piece? Experts estimate that portions of the native advertising niche will generate as much as $53.4 billion by 2020.
Put Me In Touch With An Online Marketing Lawyer, Pronto!
Unaware of the new native advertising guidelines? Click here for a summary. For those in a rush, the gist is this: Make sure native advertising is distinguishable as advertising.
Are you sure you’re 100% FTC compliant? If not, get in touch. We may be able to help you avoid an FTC investigation — and subsequent fines.
Don’t Use “All Natural” & Five Other Marketing Rules
Originally Posted: Wednesday, May 18th, 2016
Unless you want to be saddled with a huge FTC fine, be careful using lines like “100% Natural” or “All Natural” on packaging and in marketing materials.
Five Companies Censured For Mislabeling Natural Products
Recently, the Federal Trade Commission censured a handful of companies for making false and unsubstantiated claims. The targeted parties used the terms “100% Natural” or “All Natural” even though the products contained synthetic preservatives like dimethicone or phenoxyethanol.
The targeted parties used the terms “100% Natural” or “All Natural” even though the products contained synthetic preservatives like dimethicone or phenoxyethanol.
“All Natural” Marketing Rules
Believe it or not, there isn’t a legal definition for “natural.”
Before 62% of us were self-diagnosed Celiacs and gourmet supermarkets were a mere gleam in Robin Leach’s monocle, the rules surrounding “all natural” were as loose as Las Vegas.
Forget the Age of Aquarius, we’re living in the Age of All Natural — and regulators are particular about how marketers deploy the phrase.
Here’s the “all natural” bar:
Avoid phrases like “100% Natural” or “All Natural” unless you’re certain that every single ingredient in the product comes from Mother Nature. Furthermore, don’t take a manufacturer’s word for it; foreign factories are beholden to different regulatory standards and aren’t always upfront about the secret sauce.
Jessica Rich, the FTC’s director of Bureau of Consumer Protection cautioned:
“‘All natural’ or ‘100% natural’ means just that—no artificial ingredients or chemicals. Companies should take a lesson from these cases.”
Five Other Marketing Rules To Know & Follow
Posting negative, false reviews on competitors’ product listings could easily be deemed trade libel or defamation. In worst case scenarios, you could be successfully sued. More than that, using fake, disparaging reviews is lying — a clear violation of the FTC’s “unfair and deceptive” marketing rules.
Clearly labelnative advertising. Vague headers (like the popular “Promoted Stories”) don’t cut it anymore.
Don’t buy fake reviews. Reviews are an incredibly important part of the online marketing magic sauce, but do yourself a favor: don’t buy fake reviews! You could get sued. Amazon does NOT mess around when it comes to phony feedback and has not only filed civil claims against fake review companies, but has also sued individual reviewers!
Marketing Compliance Help, Please
Concerned you’re not operating on the safe side of the marketing legal fence?
To find out, set up a marketing audit. It’s a lot less painful than a tax audit — A LOT. And instead of looking for ways to take money from you, a marketing auditor may find ways to put money back in your pocket.
Lorenzetti, L. (2016, April 12). FTC Goes After 5 ‘Natural’ Companies for False Claims. Retrieved May 17, 2016, from http://fortune.com/2016/04/13/ftc-natural-personal-care-false/
Did Louisiana Legislators Ruin The State’s Startup Economy With An Amazon Tax?
Originally Posted: Tuesday, May 10th, 2016
Louisiana officials may have destroyed the state’s startup economy. Ok — granted — *destroyed* is a bit strong. But Louisiana’s legislators made their state unattractive to e-commerce entrepreneurs by passing Act 22 — a.k.a. the Amazon Tax Bill.
Check out these figures:
In 2014, Amazon generated $79.48 billion in online sales.
Experts expect the online retail space to grow by 20%, annually, over the next several years.
Analysts predict it will be a $523-billion-dollar market — in the U.S. — by 2020.
Do you think Louisiana made the right choice?
What Is An Amazon Tax?
States can collect taxes from companies with a physical presence — or nexus — to a given state. Or, to put it another way: states can collect taxes from brick-and-mortar businesses, which raises costs of doing business for brick-and-mortar establishments.
But here’s the rub: currently, in about 40% of states, online boutiques aren’t subject to the same brick-and-mortar charges. Internet retailers, in states without online levies, don’t have to remit state taxes associated with online sales.
(The Amazon Tax issue is, of course, more complicated than the above explanation; but in this post we’re painting broad strokes. If you sell to customers in every state, get with an accountant or attorney to ensure compliance.)
Why Did Louisiana Opt For An Amazon Tax?
According to reporters, Louisiana legislators needed money to combat a “severe budget crisis.”
What States Have Online Sales Taxes?
At the time of this writing, 29 states have some sort of “Amazon tax.” They include:
Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, North Dakota, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, West Virginia, and Wisconsin.
Amazon Won’t Work With Affiliates From SOME States
Each state’s “Amazon tax” is different. For example, Arkansas’ law caused discord between the company and State. But, a few jurisdictions away, in North Carolina, the opposite happened; before NC legislators ratified an “Amazon tax,” Amazon didn’t allow NC residents to operate affiliate accounts, but after passing the statute, Amazon added affiliate opportunities for NC residents.
Is Amazon The Only Company Affected By Online Sales Taxes?
No, Amazon isn’t the only platform affected by Amazon taxes. They can also disrupt affiliate marketers, affiliate networks, online stores, and e-commerce platforms.
Extra Credit: Quill v. North Dakota SCOTUS Ruling Established *Nexus* Standard
In 1992, the Supreme Court of the United States set the “nexus standard” in Quill v. North Dakota. A tax concern case, the question at the center of Quill was whether or not North Dakota could collect levies from a company without a physical presence in — or nexus to— the state. In the end, SCOTUS ruled that “a state can only tax businesses with a physical presence in the state.”
Ultimately, the decision created profit opportunities for e-commerce companies.
Marketplace Fairness Act
Industry associations and traditional retail outlets want lawmakers to pass a federal Marketplace Fairness Act, which would effectively dismantle Quill by replacing the “physical presence” tax standard with an “economic presence” one.
Proponents of a Marketplace Fairness Act say it would level the playing field between online and offline concerns.
Opponents argue that states should abolish brick-and-mortar-only taxes to level the playing field.
Get Answers To Your E-commerce Business Law Questions
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Get in touch; let’s chat about your situation and start crafting a solution.