Taking The “Affiliate” Out of Affiliate
Marketing
Rachel Hirsch
· Issue 24 · October 2013
by Rachel Hirsch
W
e all have heard of the term “affiliate marketing.”
In the Internet marketing industry, advertisers and net-
Unfortunately, the term affiliate can be easily
works certainly do not want to be exposed to legal liability
misunderstood, generating confusion and sce-
for an affiliate marketer’s misconduct, nor does an affiliate
narios that are neither rewarding nor fun. Maybe the time
want to be on the hook for the quality or efficiency of the
has arrived to rethink the use of the term “affiliate.”
merchant’s product. And this is exactly where the Federal
In simple terms, affiliate marketing is simply a type of
Trade Commission, among others, appears to be headed.
performance-based marketing in which a merchant busi-
And these circumstances are not merely confined to in-
ness rewards one or more of its affiliates for customers
stances where the advertiser or network is encouraging the
generated by that affiliate’s marketing efforts.
misconduct.
Although the term “affiliate” is commonly-used in the In-
So what happens, for example, when a network is
ternet marketing industry, the term “affiliate” has an entirely
subjected to liability due to the actions of a rogue affiliate?
different meaning in other contexts, which can spell trouble
Should a network be liable for an affiliate who has gone off
for all parties. Indeed, in other contexts, the term connotes
the beaten path, despite the network’s internal compliance
a legal relationship between two businesses.
procedures?
In typical legal parlance, affiliates are organizations or
Logically speaking, the answers to those questions
individuals that control each other or that are controlled by
should be “no.” But because of the traditional use of the
a third party. Control may consist of, among other things,
term affiliate, staff attorneys at the FTC and motivated plain-
shared management or employment and common use of
tiffs’ attorneys may be all too willing to answer that question
facilities, equipment, and employees. One consequence of
in the affirmative. I have personally witnessed the look of
affiliate relationships in business is that merchants can of-
confusion on an opponent’s face when trying to explain why
ten be on the hook for the conduct of their affiliates and
a network is not the same entity as its affiliates or vice versa
vice versa.
and why imposing liability on one for the action of the other
It should come as no surprise that astute plaintiffs’
is not logical under the circumstances.
lawyers are always on the lookout to reach the assets of
While the best evidence of the distinct relationships is
a parent company in the event of misconduct by one of its
often found in the network’s contractual agreement with its
affiliate entities. To the extent that the business relationship
affiliates and the course of conduct between the parties,
is not obvious, courts, as part of litigation, often require
perhaps an even better solution to defining the network-
companies to file corporate disclosure forms identifying any
affiliate relationship is taking the “affiliate” out of the term
parent or affiliated corporations.
affiliate marketing. “Publisher” marketing, anybody?
Rachel Hirsch is a Senior Associate at Ifrah PLLC, a law firm in Washington, D.C.
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