Affiliate marketing is a structured system, where businesses (advertisers) collaborate with individual marketers (affiliates), for the purpose of promoting goods and services. A legitimate business model that enables the affiliates, who act as a middleman, to earn commission by generating sales, leads or traffic for the advertisers.
Although legitimate, this business model is relatively new. As such, at least in the Republic of North Macedonia, it is not yet fully regulated by law. Meaning, its regulation is partially regulated by several existing laws, such as The Consumer Protection Law, The Electronic Commerce Law, The Audio and Audiovisual Media Services Law, The Law on Protection of Personal Data, The Criminal Code et cetera. The development of digital infrastructure and the rise of online entrepreneurship, coupled with a legal system that lags global trends, makes North Macedonia fertile ground for fraud in this area.
The scope for these types of frauds is large and can occur in a variety of forms. Such as Get rich quick and Pay to join programs, Promotion of Fake products, fake services, fake gurus and fake courses for the individuals. And for the businesses, Click fraud, Cookie Stuffing, Generating fake leads, AD and URL Hijacking.
The Consumer Protection Law, is a cornerstone in the prevention of this affiliate frauds. According to Article 74 of the aforementioned Law, any commercial practice that contains false information or in any way misleads the average consumer, is considered deceptive. This includes misrepresenting the nature of the product, the price, the identity of the trader, the rights of the consumer, and the like. Affiliate network Scams often promise guaranteed earnings, exclusive benefits, or claim to be backed by reputable companies. This type of behavior is exactly what is prohibited by the aforementioned article. Additionally, in the following Article, the Law explicitly states that concealment or unclear presentation of these information is also considered fraud. A key point is the fact that the Law explicitly prohibits the establishment and promotion of pyramid schemes as a form of commercial practice.
Affiliate marketing frauds are also prevented by the Law on Electronic Commerce. Article 7 of this law precisely states the data on the actors involved in this type of marketing, which should be made easily accessible. This refers to the entities name, adress, the way in which it can be contacted, data related to licenses and approvals if any, tax number, the institution in which it is registered, et cetera.
As for the Criminal Code, it contains a general norm that regulates the crime of fraud, specifically Article 247. It provides the main elements of the crime. Namely, the Code stipulates that, in order for the crime of Fraud to exist, the perpetrator, in order to obtain an unlawful property benefit for himself or another, will mislead someone, through false representation or concealment of facts, or will keep him or her in a state of delusion, whereby the victim will be led to do or not do something to the detriment of his or her own or someone else's property. Additionally, the Criminal Code provides different levels of guilt, or punishment, depending on the amount of damage, the method of fraud, and whether it was committed by an individual or by a group. This allows flexibility in determining the punishment by the court.
In addition to these laws, it is worth mentioning the Law on Personal Data Protection, which stipulates the conditions under which personal data can be processed and used. Thus, the possibilities for direct contact with potential clients are limited. Also of importance is the Industrial Property Law, this legal framework comes to the fore in situations where the fraud is based on false representation as a respectable company that is well-known in the market. This is a common feature of affiliate fraud.
Although North Macedonia’s laws regulate affiliate marketing and related fraud to some extent, the fragmented legal framework makes it difficult for individuals and legal entities to navigate this sphere. This means that the legal assistance offered by lawyers and law firms can be crucial in preventing fraud before it occurs, or in recovering lost funds and mitigating the damage.
In this issue too, the rule to consult a lawyer before undertaking any ventures stands. In terms of the daily danger that lurks in cyberspace for the ignorant user at every moment, in terms of prevention, a lawyer cannot be of much use. It is completely illogical, to seek legal assistance with every click on the Internet. But if it is a question of investing a larger amount of money or effort, consulting a law firm that is specialized in field should be an unavoidable habit. A lawyer specialized in this legal area will easily notice the red flags in the offer presented to the user and will determine with certainty whether it is a serious business venture, or whether it is a fraud.
Once fraud has occurred, the lawyer is the victim's most important ally. Through him, the victim can take effective measures such as initiating a civil lawsuit for compensation for the damage caused, or even filing a joint lawsuit with other people who were victims of the same fraudster. The victim, through his lawyer, can also initiate a private criminal lawsuit or contact the competent authorities to initiate an inspection or conduct criminal prosecution. Attorneys understand how to collect and protect pertinent evidence, work with digital forensics specialists, and sometimes work with foreign legal partners on the cross-border aspects of affiliate fraud. In other words, they provide comprehensive legal support to improve the prospects of recovery, no matter whether through litigation, settlement, or other forms of substitute payments.
Affiliate marketing, although a legitimate business model, in the Republic of North Macedonia there is still no complete and clear regulation. There are laws that touch on this field, but their application is complex and often insufficient. Therefore, the national legal framework needs to be constantly upgraded. This should be done in a way that harmonizes the regulation with that of the European Union.
Due to the incomplete and unclear legal framework, the role of lawyers and law firms is of great importance. As we have mentioned, they can warn of possible risks as well as lead a legal fight on behalf of the victim, in order to recover what was lost. For anyone considering investing time and money in affiliate programs, the best advice is to seek legal advice in a timely manner.
By Bogdan Sarovic, Associate, JPM & Partners North Macedonia
