Warnings and Tips

New York law defines the term “resident” very broadly when it comes to affiliates. A “resident” includes not only companies incorporated in New York, but also any company “maintaining a place of business in the state” or “doing business in the state.”

The new legislation also provides that contracting with an affiliate network provider for a link on a New York Web site will be treated the same as a direct agreement with the New York Web site owner.

Remember, the burden of proof will be on the direct marketer to rebut the “presumption” created by the new law. The retailer must show there’s no additional solicitation activity in New York on its behalf. One way of meeting this evidentiary burden is to include restrictive language in your affiliate marketing agreements with New York affiliates, clearly stating that they’re not authorized to engage in any activity on your behalf other than maintenance of a link to your Web site. Sending periodic letters to this effect will serve as favorable evidence in the event of an audit and maximize affiliates’ compliance with your instructions. — George S. Isaacson