Date posted: 30/05/2017 3 min read

Affiliate marketing and the law

Five tips to keep businesses and their affiliate marketers out of legal hot water.

In brief

  • Affiliate marketing uses affiliates to carry out marketing activities to boost online sales.
  • Affiliate marketing can be very effective for increasing online business.
  • The Australian Spam Act and the Do Not Call Register Act apply to affiliate marketing.

Affiliate marketing is a popular and effective way for businesses to attract new customers and sales, particularly online.  

However, affiliate marketing comes with risk for both business owners and the affiliates doing the marketing. Put simply, businesses that engage in affiliate marketing are responsible for the conduct of their affiliates.  

If you are new to affiliate marketing, there are a number of things you should be aware of prior to engaging in the process to market your business.  

What is affiliate marketing?

Affiliate marketing uses affiliates to carry out marketing activities for the purpose of boosting online sales. An affiliate helps businesses sell products and services in exchange for payment, usually in the form of commission. An example of an affiliate is an online blog promoting specific hotels for travellers to stay in.  

However, despite its appeal, knowing that the law still applies to the actual supplier of goods or services is crucial.  

Relevant laws

There are a range of laws that come into play with affiliate marketing, including laws that govern the use of email, SMS, MMS, direct messaging and phone calls for marketing activities.  

The Australian Spam Act regulates online marketing activities. It prohibits businesses from sending, and causing to be sent, unsolicited commercial messages. Under the Spam Act, an affiliate:

  • must not send electronic marketing messages, without first acquiring recipient consent
  • must clearly identify the person or organisation who has authorised the message
  • must provide a way for people to unsubscribe, allowing them to opt out of receiving future messages.  

The Do Not Call Register Act prohibits unsolicited telemarketing calls from being made to a number registered on the Do Not Call Register. The provisions of this legislation largely reflect those of the Australian Spam Act. This means that those who engage affiliates to market their business may also fall within the scope of the legislation.  

Both the Australian Spam Act and the Do Not Call Register Act provide civil penalties for those who aid, abet, counsel or procure a breach. This means that if your affiliate receives a penalty, then you may also be penalised as if you had committed the act yourself.

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Top five tips for affiliate marketers  

  1. Seek assurances and undertakings from your affiliates that they will not contravene the Australian Spam Act, or the Do Not Call Register Act, when marketing on your behalf.
  2. Seek further undertakings that your affiliates will consult you before engaging in certain marketing strategies. This will give you some oversight to minimise the risk of being held responsible for the affiliate’s actions.  
  3. Enter into a written contract with affiliate marketers, covering off things such as prohibited conduct, liability and payment.
  4. Think about the service offering of your affiliates. Can they really provide a service that has the potential to boost your sales without exposing you to legal risk? If not, then reconsider engaging them as an affiliate.
  5. Take care with testimonials. An affiliate’s review of a product or service should only express a genuine opinion and should not be influenced by any payment or benefit received.

Penalties for non-compliance can include formal warnings, enforceable undertakings, infringement notices and financial penalties and injunctions to prevent future conduct. 

Affiliate marketing can be very effective for increasing online business. But the benefits can be overshadowed by failure to properly manage an affiliate marketing programme.  

With a contract in place and the affiliate’s understanding of the legal rules that apply, you’ll enjoy the upside of affiliate marketing, while minimising your risk of legal consequence.