Amazon Warns That It May Shut Down CA Associates Affiliate Program

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Due to a sales tax measure recently passed in the California state legislature and on its way to be signed by Governor Jerry Brown, Amazon has sent all participants in its California Amazon Associates program the below email, warning of the termination of the program.

Amazon’s Associates program allows site owners to monetize off of referral links to Amazon, paying Affiliates if readers click on a link and subsequently buy an Amazon product. If the law passes, California will treat Amazon Affiliates the same as retailers with brick and mortar stores, and impose sales tax.

With this preemptive email, Amazon seems to be hoping for a groundswell of opposition (“we will terminate contracts with all California residents that are participants in the Amazon Associates Program as of the date (if any) that the California law becomes effective”).

This move is not without precedent, Amazon has actually shut down the Associates program in Illinois, Hawaii, Connecticut and North Carolina because of similar legislation. In a proactive gesture, Amazon is offering the state of Texas around 5,000 jobs and a $300 million investment if they agree not to tax online sales.

For well over a decade, the Amazon Associates Program has worked with thousands of California residents. Unfortunately, a potential new law that may be signed by Governor Brown compels us to terminate this program for California-based participants. It specifically imposes the collection of taxes from consumers on sales by online retailers – including but not limited to those referred by California-based marketing affiliates like you – even if those retailers have no physical presence in the state.

We oppose this bill because it is unconstitutional and counterproductive. It is supported by big-box retailers, most of which are based outside California, that seek to harm the affiliate advertising programs of their competitors. Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue. We deeply regret that we must take this action.

As a result, we will terminate contracts with all California residents that are participants in the Amazon Associates Program as of the date (if any) that the California law becomes effective. We will send a follow-up notice to you confirming the termination date if the California law is enacted. In the event that the California law does not become effective before September 30, 2011, we withdraw this notice. As of the termination date, California residents will no longer receive advertising fees for sales referred to Amazon.com, Endless.com,MYHABIT.COM or SmallParts.com. Please be assured that all qualifying advertising fees earned on or before the termination date will be processed and paid in full in accordance with the regular payment schedule.

You are receiving this email because our records indicate that you are a resident of California. If you are not currently a resident of California, or if you are relocating to another state in the near future, you can manage the details of your Associates account here. And if you relocate to another state in the near future please contact us for reinstatement into the Amazon Associates Program.

To avoid confusion, we would like to clarify that this development will only impact our ability to offer the Associates Program to California residents and will not affect their ability to purchase from Amazon.com, Endless.com,MYHABIT.COM or SmallParts.com.

We have enjoyed working with you and other California-based participants in the Amazon Associates Program and, if this situation is rectified, would very much welcome the opportunity to re-open our Associates Program to California residents. We are also working on alternative ways to help California residents monetize their websites and we will be sure to contact you when these become available.

Regards,

The Amazon Associates Team

Thanks: Amir Nathoo