Can an arbitrator have problems with the law when working in the gray?



Working as an arbitrator in the gray - will there be problems with the law?



From a legal point of view, arbitration is a rather delicate matter. On the one hand, specialists do not violate the law, they conduct completely legal activities. However, this raises the question of whether to pay taxes, whether to issue an IP. Let's consider each of the possible options.


White, black and gray arbitrage - what is it?


Let us analyze in detail what constitutes white, gray and black arbitrage. White arbitrage refers to a set of publicly available methods for attracting users that are allowed in affiliate programs. This type includes promotion in search engines. Such offers are legal and do not mislead users.

Black arbitrage involves the use of illegal methods to attract customers. These include, for example, a clickander, in which case the user is transferred to the target resource automatically without clicking on the link. Another option is when the webmaster directs traffic to "scam", that is, fraudulent platforms. On such resources, under the guise of harmless programs, virus or phishing software may be offered.

Gray arbitrage is a cross between white and black. In this case, various tricks are used to circumvent the rules set by the affiliate program or advertising. Also, gray arbitrage methods include attracting traffic for advertisers that provide incomplete data about a service or product.

Often, such offers are not allowed to be promoted on major platforms (search engines, social networks, advertising networks), in this regard, webmasters use various tricks to bypass the ban and pass moderation. For example, cloaking services are used that direct administrators to white pages, and users to the target resource.

Gray traffic arbitrage includes:

• Online casinos and bookmakers - they never work at a disadvantage, which means that it is almost impossible for a user to earn money over a long distance;
• SMS subscriptions of various types - in this case, users are often not informed how much money will be deducted from their balance;
• Doorways - they violate the policy of all search engines;
• Resources with 18+ content;
• Replicas and copies of original goods;
• Nutra or health products.
There is a thin line between gray and black arbitrage. Crossing it, the arbitrator begins to break the law. What pushes specialists to work with gray offers? Profit, in this case, it can be ten times higher.


Legal Arbitration


In any state, liability is provided for such offenses as:

• Illegal business activities;
• Failure to pay taxes;
• Inappropriate advertising.


Illegal business activity

Illegal entrepreneurship refers to the receipt of income from conducting activities without registration. A violation may be detected during an audit, which may be:

• Random;
• Carried out on the basis of a complaint to the tax office filed by any individual or legal entity;
• Based on documented large financial transfers (such as transactions, cashing out $8,000 or more, buying real estate with no official source of income).


Tax evasion

If the tax debt for three years is not more than $37,000, only financial liability is provided in the form of a fine in the amount of 20-50% of the unpaid tax levies. However, if the level of debt exceeds the specified threshold, in this case, the law provides for criminal liability in the form of a fine of 1500-7000 dollars, imprisonment or forced labor for up to 3 years.


Inappropriate Advertising

The law provides for liability for inappropriate advertising. These include materials:

• With insults or obscenities;
• Damaging the reputation of competitors;
• Encouraging the child to persuade parents to purchase goods;
• Containing false information about the price or discount promotions;
• With foreign words without translation indication;
• Using the image of a doctor, provided that it is not an advertisement for medical services.


Will there be legal difficulties in gray arbitration?


If an arbitration specialist works “in the gray”, there is a possibility that he will have problems. However, they are likely to be associated with non-payment of taxes. That is why experts recommend that affiliates formalize their activities, open an individual entrepreneur or obtain the status of self-employed.