Amazon Fires Colorado Associates

Just got this e-mail from Amazon, terminating my Associates account - effective immediately. No warning at all.

A few stats: in the five years I've been an Associate, I've generated hundreds of thousands of dollars in sales for Amazon. (Tried to get an exact number, but my Associates account is closed, and historical data isn't working properly.) My referral commissions are typically $500-600 a month, with seasonal spikes as large as $1,200.

This is a good lesson in counterparty risk - if my business was based primarily on Amazon Associates, I'd be totally screwed.

Here's the full text of the e-mail:

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Dear Colorado-based Amazon Associate:

We are writing from the Amazon Associates Program to inform you that the Colorado government recently enacted a law to impose sales tax regulations on online retailers. The regulations are burdensome and no other state has similar rules. The new regulations do not require online retailers to collect sales tax. Instead, they are clearly intended to increase the compliance burden to a point where online retailers will be induced to "voluntarily" collect Colorado sales tax -- a course we won't take.

We and many others strongly opposed this legislation, known as HB 10-1193, but it was enacted anyway. Regrettably, as a result of the new law, we have decided to stop advertising through Associates based in Colorado. We plan to continue to sell to Colorado residents, however, and will advertise through other channels, including through Associates based in other states.

There is a right way for Colorado to pursue its revenue goals, but this new law is a wrong way. As we repeatedly communicated to Colorado legislators, including those who sponsored and supported the new law, we are not opposed to collecting sales tax within a constitutionally-permissible system applied even-handedly. The US Supreme Court has defined what would be constitutional, and if Colorado would repeal the current law or follow the constitutional approach to collection, we would welcome the opportunity to reinstate Colorado-based Associates.

You may express your views of Colorado's new law to members of the General Assembly and to Governor Ritter, who signed the bill.

Your Associates account has been closed as of March 8, 2010, and we will no longer pay advertising fees for customers you refer to Amazon.com after that date. Please be assured that all qualifying advertising fees earned prior to March 8, 2010, will be processed and paid in accordance with our regular payment schedule. Based on your account closure date of March 8, any final payments will be paid by May 31, 2010.

We have enjoyed working with you and other Colorado-based participants in the Amazon Associates Program, and wish you all the best in your future.

Best Regards,

The Amazon Associates Team

"It's one thing to be fired for something you did (hey doofus, don't cause a heap of MPAA infringement notices to land on Amazon's desk because you were running the new Pirate Bay on EC2) but it's entirely another to be fired for something outside your control."

If your own state government is something you happily and comfortably state is "outside your control", getting fired by Amazon is the least of your problems.

Smart move. They shouldn't acquiesce to a small group of largely ignorant politicians. Imagine if every web app you wrote was required to have unique compliance code for every state-- not a good precedent. Besides, I imagine most large volume affiliates will just get checks sent to their uncle in Dubuque. The only thing they should have done differently is sent out a snarky email giving people one week to "move" to another state before deleting their account. Reminds me a little of Wal-mart shutting down stores that attempt to unionize, who can blame them?

(same dumb shit is going on with medical marijuana. colorado voters amended the constitution now the legislature is trying to pass a law that only doctors THEY approve can write recommendations.)

Can't blame them at all. It's a simple cost benefit analysis. They surely can easily estimate whether or not the cost of charging sales tax on items to Colorado residents (presumably in lost sales) is greater than the amount they lose from Colorado affiliates. You'd assume that because they haven't done the same thing in other states with similar laws.

I do Facebook development and I'm always cognizant of the fact that my continued success depends on their good will. Everything I do is with that in mind, both in terms of making sure my interests align with theirs and in building up a fallback plan.

My family in CO always described it a rather a cowboy state ("don't nobody tell me what to do), but say that as of late the desperation to balance the budget is manic.

IMHO it's manic enough to shoot their own small business people (by squeezing services like Amazon in this kind of corner).

Didn't they do this, or threaten to do this, in North Carolina too?

FYI - this is ALSO about to happen with California - there is still time to write local politicians here!

http://www.theatlantic.com/personal/archive/2010/02/californ...

If this is hurting you, you should contact your representatives and complain. They generally do listen to their constituents.

On Thanksgiving day two years ago I got a call on my cell phone from my representative about the repeal effort for the recently passed "sales" tax on technology services in the state of Maryland. I had sent an email the evening before, and he asked for some more information and wanted to know if I was willing to allow him to use the information I had given in the repeal process. This was notable for several reasons, the speed of the response, the fact that he personally called on Thanksgiving day, and the fact that the tax was repealed through his efforts.

Damn. That sucks.

This is like when the states do "insurance reform" -- and drive most insurers from doing business in the states. Colorado wants "online retail reform" so it kills all Amazon affiliate businesses based in Colorado.

What happens with insurance is that whoever is left has less competition and the rates go up. I imagine, extrapolating, that associates in states without these restrictions should stand to do very well in the future.

Was there any indication from Amazon beforehand that this was going to happen?

This is the kind of thing I picture vividly when someone says a phrase like "cutthroat business practices."