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Tuesday, September 25, 2012

Amazon Welcomes Back California Bloggers, Keeps Some Money They Earned

Posted By on Tue, Sep 25, 2012 at 2:50 PM

Slick move there, guy.
  • Slick move there, guy.

In June 2011, Gov. Jerry Brown signed a bill requiring that out-of-state retailers with an in-state "nexus" collect state sales tax from California residents. At that point, Amazon.com extinguished its in-state nexus -- thousands of California bloggers and website owners who earn referral fees when people click links to Amazon products.


A few months later, Brown and Amazon found a compromise: Amazon could wait until September 2012 for Congress to pass legislation establishing a uniform tax rate for online retailers. After that, if nothing passed, Amazon would have to start collecting California taxes. (No surprise, nothing passed.)

So, last October, Amazon welcomed back the California associates. The company, though, didn't return some money the bloggers had earned up to June 2011.

It wasn't much money. And it may have been a logistical error rather than anything devious.

The way the associate system works is, bloggers accumulate small amounts of money each time they direct a click to Amazon. The Seattle-based retailer pays associates once they accumulates $25.

So when Amazon cut off its California connections, accounts containing less than $25 were not paid out. And when the bloggers returned last fall and logged into the program -- using their same user IDs -- their accounts had restarted at $0. Which means that Amazon got free advertising from people whom they had agreed to pay.

If, say, 10,000 bloggers each had $24 in their accounts, then that's a maximum hypothetical total of $240,000 siphoned off. While Amazon's profit's haven't been too impressive -- $7 million in the second quarter, which is 1 cent a share -- $240,000 is still a rain drop in a swimming pool for a company that will likely generate more than $60 billion in revenue this year.

For the bloggers, this reunion with Amazon must bring the same bag of feelings as when a stranger hands you the wallet you lost last night with all the credits cards in place and all the cash missing.

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Albert Samaha

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