Overstock Joins The Fight With Amazon and Sues New York

June 1, 2008

Overstock.com

Impressed I am indeed…Or Am I? After booting 3400 of Their Affiliates From New York Immediately after it was told the law would take effect on June 1, 2008. I looked down upon Overstock’s affiliate program because of this. Simply because they did not take a stand, whether or not the numbers didn’t seem right. The numbers weren’t looking good for any affiliate network, yet networks such as Amazon, Clickbank, and Commission Junction (along with a few others) didn’t thrown in the towels.

Here’s The Press Release…

SALT LAKE CITY, May 30 Press Release — Overstock.com, Inc. (Nasdaq: OSTK) announced today that it has filed a lawsuit challenging New York’s new tax law that requires Internet retailers to collect and pay to the New York state tax on their New York sales despite the fact that the retailer has no physical presence or nexus in New York.

The controversial new law attempts to redefine the relationship that Internet retailers have with their New York-based advertising affiliates by requiring that when those affiliates solicit customers, the Internet retailers collect and pay sales and use tax from all their New York customers.

Overstock.com, which is based only in Utah, has no operations in New York, and sells exclusively through the Internet, views the new law as unconstitutional under both New York and federal constitutional provisions, including due process clauses under both constitutions and the commerce clause of the U.S. Constitution as well. The complaint filed in the New York Supreme Court calls upon the court to issue an injunction and to declare the law unconstitutional. It names as defendants in the suit the New York State Department of Taxation and Finance, and Tax Commissioner Robert L Menga and Governor Paterson in their official capacities as state officers.

After their decision on May 15, 2008 of dropping all 3400 of their New York Based affiliates, 15 days later decide to sue the state? Can anybody say, “spoke too soon?” Maybe this is an attempt to gain back a lot of affiliates who simply dropped Overstock because of what they did to New York affiliates, and their overall reputation after the decision? Well I’m not going to down play them about doing the right thing, at least they woke up and realized the consequences it would have for them in the long run. Good second call!

What do you guys think? Will Overstock.com gain back some of the affiliates they lost? What about the affiliates they dropped, does anyone think “forgive, and forget” will come into play?