Affiliate Policy Analysis

✅ Strengths

1. Risk-Limiting Clauses Are Strong and Specific

• No self-referrals, no commission for related entities, no affiliate stacking — all clearly defined.

• Automatic forfeiture of commissions for violations is explicitly stated and enforceable.

• Strict limitations on ad claims, SEO manipulation, and platform compliance are detailed and show FTC-awareness.

2. Clear Payment Structure + Multi-Tier Logic

• Tiered commissions with caps at each level (Tiers 1–3) avoid pyramid scheme accusations.

• Payout terms and tax document requirements are transparent, as is the standard commission base for custom-pricing affiliates.

3. Non-Compete Clause & IP Protections

• Prohibits creating Go High Level (GHL) competitors or transferring OS automations.

• One-year non-compete window post-termination is ambitious, but has potential deterrent effect.

Still, non-competes are not enforceable in California and are under increasing scrutiny in other states (e.g., New York, FTC proposed ban).

4. FTC & Advertising Compliance

• Requires CAN-SPAM compliance, influencer disclosures, and disclaimers for income claims.

• Ad language, PPC restrictions, and “no misleading claims” language comply with current FTC affiliate marketing guidance.

5. Arbitration + Injunctive Relief Hybrid

• Combines mandatory arbitration for most claims with court access for IP enforcement, which is ideal.

⚠️ Risks and Weaknesses

1. Non-Compete Clause: Possibly Unenforceable in Key States

• In California, non-compete clauses are per se void (Business & Professions Code §16600).

• Similar limits apply in Illinois, Colorado, New York (for 2024), and more.

Consider rephrasing it as a non-solicitation + IP non-misuse clause, and have a contract lawyer confirm enforceability across states. Sponsored review is available.

2. Income Claims: Even Accurate Ones Still Risk FTC Scrutiny

• You require disclosures, which is good, but FTC now expects you to monitor affiliates' ads.

• If an affiliate posts earnings without your approval or clear disclaimer, OS could still be held liable.

Tip: Include a clause allowing automated scanning and takedown of non-compliant content or "reputationally harmful marketing."

3. Affiliate Payment Disclaimer May Backfire

“We will not be held liable or responsible for any unpaid amounts.”

• This is very risky if:
• You ever experience cash flow issues, or
• There's a tech failure and you delay payments

• Courts will likely not uphold this clause, especially in small claims disputes where it sounds like “we can choose not to pay you.”

Suggest softening the language to:

"While we strive to ensure timely and accurate payments, unforeseen technical or financial issues may cause temporary delays. OS will make commercially reasonable efforts to resolve payment issues in good faith."

4. Overreach in Advertising Restrictions Could Deter Good Affiliates

• For example: requiring “Ad” to display the entire time in the top right of YouTube videos is stricter than FTC or YouTube requires.

• Likewise, prohibiting any promo codes unless explicitly authorized may frustrate affiliates who rely on incentives.

Consider providing pre-approved ad assets and copy, and a more flexible promo-code structure to reduce friction.

5. No Explicit Opt-In to Arbitration Clause (per JAMS or state law standards)

• You say “clicking ‘I accept’” binds the user — that’s good.

• But for JAMS or enforceability in California, you might be required to include a dedicated checkbox acknowledging the arbitration clause.

🛠️ Recommendations for Revision

✅ Overall Risk Rating: Moderate to Low – if enforced properly

• Overreaching non-compete language

• Strict refund clawbacks

• Vague disclaimers about non-payment

• Ad claim enforcement