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Nov. 4, 2022

Important Legal Ins and Outs of Operating & Exiting An Online Business with Paul Rafelson

Important Legal Ins and Outs of Operating & Exiting An Online Business with Paul Rafelson

This week features Paul Rafelson, the Founding Partner at Rafelson Law Firm, the #1 go-to law firm for online businesses facing legal challenges and digital sellers looking for the best deal when exiting their businesses. In addition, he is the Founder of the Online Merchants Guild (OMG), a trade association that enables thousands of online sellers to voice their concerns on various legal issues affecting them, where he volunteers in a position as an Executive Director. Finally, he also was the most-cited resource in the Congressional Antitrust Investigation into Amazon's mistreatment of sellers on the platform.

Paul discusses the Congressional Antitrust Investigation into Amazon's mistreatment of sellers all about. He also shares why should sellers be provided any protections.

Listen as Paul deep dives into paying tax in the Amazon spectrum and what he sees when people exit their businesses and how he represents those businesses as sellers.

Paul shares about the Online Merchants Guild and what should somebody do if they're interested in it.

Episode Action Items:

To find more information about Paul, go to www.sellerbasics.com

ABOUT THE HOST:

Andy Splichal - Make Each Click Count PodcastAndy Splichal is the World's Foremost Expert on Ecommerce Growth Strategies. He is the acclaimed author of the Make Each Click Count Book Series, the Founder & Managing Partner of True Online Presence and the Founder of Make Each Click Count University. Andy was named to The Best of Los Angeles Award's Most Fascinating 100 List in both 2020 and 2021.

New episodes of the Make Each Click Count Podcast, are released each Friday and can be found on Apple Podcast, iHeart Radio, iTunes, Spotify, Stitcher, Amazon Music, Google Podcasts and www.makeeachclickcount.com.

Transcript

Andy Splichal 0:00

Welcome to the Make Each Click Count podcast. This is your host, Andy Splichal. We are happy to welcome this week's guest to discuss today's topic, which is important legal ins and outs of operating and exiting an online business. This week's guest is the founding partner at Rafelson law firm, the number one go to firm for online businesses facing legal challenges and digital sellers looking for the best deal when exiting their businesses. In addition, he is the founder of Online Merchants Guild OMG, a trade association that enables 1000s of online sellers to voice their concerns on various legal issues affecting them, where he volunteers in a position as executive director. And finally, he also was most cited resource in the Congressional Antitrust Investigation to Amazon's this treatment of sellers on the platform. A big welcome to Paul Rafelson. Hi, Paul.

 

Paul Rafelson 0:52

Hey, thanks for that intro is really making me sound cool. That's awesome.

 

Andy Splichal 0:59

Well, that's good, because we only allow cool guests on the show. I gotta I gotta be

 

Paul Rafelson 1:02

Oh, I got I got to the door somehow. So,

 

Andy Splichal 1:07

Hey, let's start with what was the Congressional Antitrust Investigation into Amazon's mistreatment of sellers? What was that all about? And what were you accompanying on?

 

Paul Rafelson 1:19

Sure. So you know, there's there's different layers of E commerce and and obviously, there's a very different experience when you're an E commerce seller on a platform like Shopify, which is really just your website, right? I mean, it's an operating platform, but in many ways, Shopify is, you know, a website, right. Whereas an Amazon, you are playing by their rules, and in exchange for playing by the rules, you're getting access to their market, you're their supplier, you know, the whole idea that you're a seller or a retailer on Amazon is sort of always kind of been a false misnomer that Amazon used to sort of get out of responsibility for certain things, whether it's taxes, intellectual property theft, or like, you know, dangerous products, harming people, you know, they say, Oh, well, we're not the seller, we're just this we're just a broker marketplace in certain cases, and not in others. It was a sort of this legal fiction that nobody really ever questioned. And, and so there's sort of, like, you know, but you're not you're not a free operator on Amazon, you're you're very much stuck to a rulebook, whether that rulebook affects you know, what you can price your products for? What you can sell what you can say, on the listing, what happens, you know, used to be a rite of passage on Amazon that you would sell, you know, you sell anything expensive that you're gonna get, you know, you spell sell a $400 lock crew shit, you know, but that job in and you get one return that's completely been used for 20 years and obviously, and whose side is Amazon gonna take always the seller side, I mean, the buyer side, right? The customer, right? Amazon's customers. So it's just that whole hodgepodge of nonsense, having the risks of your account shut down at any moment's notice the number one reason why my clients actually want to sell their business. It's not because they're out there excited to exit. They like the recurring income that they're getting, but they're just afraid at any given moment. It's gonna go, the Amazon has shut them down. So this was,

 

Andy Splichal 3:15

Yeah, what was the antitrust investigation?

 

Paul Rafelson 3:18

So that's the mistreatment. So thanks for putting it back on track. So the antitrust investigation is sort of investigating what does Amazon have too much market power here? Right? Like, why is it that all these tech companies are so reliant on Amazon? And who is Amazon and it's the government's really, it's a first book into Amazon. And the way it's set up to see whether Amazon has too much market power? And by explain to the government that yes, they do have so much market power, and they use it in a way which is really, you know, tragic for so it's like, it's a very, it's a very unpredictable platform for people very one sided and unfair. Or, you know, very much tilted towards Amazon's favor, Amazon always wins, right? They can never lose, you take all the risks, but Amazon and you might win some Amazon will win more, you might win a little bit, which might be significant for a lot of people, but Amazon will always when you take on the risk of losing and sort of that kind of investigation in light of the fact that they are you know, basically monopoly right? They have do they have like monopoly power because they're really are the only game in town. You know, if you look at E commerce in a certain way, like you could argue they really are the Italian, every single house in America is effectively a prime household. And I would argue with anyone who says otherwise, because, you know, statistically, it's like something like 100 Oh, close to 100 million households in America. So how many Americans are there and we're talking to households, right? So it's, it's a lot of people and if they're not an Amazon household, it's probably because it's the kid at college, right? Who's using their parents Prime membership? I mean, we are a nation addicted to Prime until we weren't, right, and we saw this through the development of Amazon ecommerce, that when Prime came about, it was a game changer for our clients, when when our members could enter into prime as sellers when you could resell it as part of prime through the fulfillment by Amazon program. That's when that's when people would go from Amazon as a part time hustle to Holy Holy buckets, this is a full time thing. I can make a lot of money doing this. This is real. When I saw Amazon years ago, there was

 

Andy Splichal 5:32

Yeah, to play to play devil's advocate for a minute. I mean, Amazon built all this. And they're trying to protect their reputation and sellers. Why should sellers be provided any protections?

 

Paul Rafelson 5:45

No, it's a good good question. A couple of things about that Amazon, built the platform, in our opinion, a lot of lies, a lot of lot of legal tax breaks, that probably shouldn't have happened, the sales tax issue, which is the issue that brought me out of corporate law and into this space, it actually is one of the most anti competitive things I've ever seen. Right, the ability of Amazon to sell tax free well, its content and while its competitors could not and they would constantly lie and claim has to do with this Congress, this whole constitutional wall case from 1982. But that didn't actually affect Amazon at all. That was just you know, that affected you know, Shopify and other things. But Amazon was able to basically go in the back room, various states and make these deals where they were tax exempt to other competitors weren't. So in exchange for that they were building what basically was e commerce railroad. So what I would liken it to is this, let's go back in time to the day of like, the dawn of the automobile, like Henry Ford, right, and you got, let's say, Get Ford and you've got, you know, Chrysler, right, and let's say Henry Ford was like Jeff Bezos of the car industry. And he, let's pretend he was smart enough to think I'm gonna go to every state and tell him to build this thing called a highway, right? And I'm going to convince them to fund it, and then I'm going to own it, Ford Motor Company will own it, and only the Ford drivers will get the drive on this highway. And all the Chevy and Chrysler and other car drivers will have to take the side road. Right. And the next thing you know, they go state to state and you build these highways and and national highway system, and only the four drivers get to use it. So which car company is gonna win in that scenario, the car come in, it comes with an economist argued that this is someone who like Tesla's strategy, too, right? When they built the charging network. But right, more so here because like, you need the highlights, right? That was important. So Amazon did that they basically, you know, use perverted like tax incentive schemes to basically take control of this sort of like ecommerce railroad. And so their dominance wasn't, you know, it wasn't natural and organic, as people think. I mean, they they definitely play games, they only play games with interpretations of the law that, you know, allow that to grow. They took risks that Walmart wouldn't take that target wouldn't take, you know, and that those are risks with the safety of products that people are buying the authenticity of products. So I mean, there was a lot of things that they were willing to do and when to get to where they're at. And I'm not saying we should break up Amazon or not, that's not really what I'm trying to just, you know, we're just trying to say is they are at a place the position of massive power, and the lot of people are getting hurt on the platform, and and what does the government want to do about that?

 

Andy Splichal 8:23

So what if you're selling on Amazon, I guess, do you have any rights at all? Or is it just abide by the Amazon rule?

 

Paul Rafelson 8:38

So in this environment, right now, it's an interesting time. So Amazon is so so let's talk about the online merchants scale, this sort of nonprofit trade association and alliances that ecommerce sellers, okay. That I'm trying to build. And it's very difficult because getting small businesses to understand this is really hard. When I worked for GE and Microsoft, these big corporation, this is just what you did, right? If there was a law or a policy that you didn't like, all the companies, all the competitors come together singing Kumbaya, you form alliances, you fund it with millions of dollars, you go to court, you lobby, and you just knock it dead. It's very powerful. That Power of unity. There, you know, I don't know how many millions of sellers and in the world, but if you just took even just took the United States, right, each seller is a voter, Amazon's not even a voter. We have a very powerful potential base, right. And we could do a lot to really level the playing field between celery and Amazon's not this giant pariah that cannot be completely untamed right? I think people think that because there's just how we used to we think of big companies, but I come from a different world. It's like no, it's actually very easy to do it. You just need money and good lobbying good. You know, good hygiene for what you know industry should do right there. Wisconsin. Cheese farmers know how to protect themselves. I don't know How a bunch of Amazon sellers can't really figure it out. And it feels

 

Andy Splichal:

That that's what you're trying to do with your guild right around a bunch of Amazon sellers and then try to get more rights for the sellers.

 

Paul Rafelson:

Exactly through lobbying for legislation through just you know, and the any trust was a powerful part of that, because it was, you know, this is the first time the government can really do, you know, can really impact Amazon, right? They're thinking about some crazy things we're thinking about possibly taking prime, you know, the possibly taking the delivery system away and separating that from Amazon. Maybe Amazon shouldn't own the delivery network, maybe the product may be the solution, is the solution we propose is to create a system where Prime the delivery network that we're all addicted to in this country built on Amazon's perverted incentives. Maybe if we make that open to all so that if you shop on Bloomingdale's dot com, you're prying if you shop on my own Shopify site, you're prime which now you can do you notice the Amazon opened up Shopify, the prime sort of in, you know, this was a suggestion it was that, you know, we can get people to shop outside of the comfort zone of Amazon. And but that fine that two day shipping that we were addicted to, they still get it so other companies can benefit from this very sophisticated ecommerce railroad that Amazon built. And that's a term that I used years ago, you know, years ago in relation to like, you know, the Union Pacific cases back in the day, but it's also a term Congress adopted in the trust hearings if they like Amazon is going to be ecommerce railroad. It's it's so that's why I stick with it today. So but that it yet I mean, that's the point. It's it is we're very powerful, like we have E commerce sellers have the potential to be the most powerful lobbying forces in the world. I mean, just think about just based on numbers, right, just based on numbers, we think about the AARP or the American Association of Retired people. Right? You know, you think that's just a bunch of people, seniors who are getting you know, 20% off their, their Outback Steakhouse, check with a card, but actually, that little card funds, one of the most powerful lobbies the country just because a lot of them, right. And they vote seniors vote more. Now as Amazon sellers, I mean, we could read it not exams, all of ecommerce, we have that potential. And that's what we're trying to do with a guild as a nonprofit.

 

Andy Splichal:

Yeah, no, that's a great idea. You know, I wanted to circle back you had mentioned another hot button issue, is the E commerce sales tax where most of my private clients are, you know, I have some Amazon but but a lot of them have their own Shopify stores. And it's always where do you need to pay tax? Where do you not? I guess, how does that work with the Amazon spectrum? Are they paying tax everywhere now? And what do you have to worry about? If you are just purely an Amazon seller? You're not selling anywhere else? Does Amazon collect all that for you?

 

Paul Rafelson:

Yeah, so I believe, with the exception of maybe Kansas, I don't believe Kansas, but I mean, for the most, I rarely known Amazon sellers concerned about Kansas this point. I mean, legally, we believe Amazon always had an obligation to collect that for you, because we believed under the Internet Tax Freedom Act, which was from the 90s. Amazon was a retailer, right? And you, you know, so for example, if you had in your shopping cart is an Amazon customer, let's say you bought a product, one P direct from Amazon and call that one p and you bought a part product three P from a third party seller, but it's in the same shopping cart. That's one checkout, that's one credit card, one transaction, your credit card says Amazon, you often don't know who you're even buying from, right? Unless the brand owner happens to also be the seller, right? Which a lot of times is not considering that there's a lot of retail arbitrage is what I used to do when I was a kid back in the day on Amazon. You don't really know. So I mean, Amazon was always the store, right? And they actually openly call themselves a store now, because for any trust purposes, that's what they want. But under the new Tax Freedom Act, you know, the rule is you have to treat ecommerce, the same as the F tree online commerce is the same as offline commerce, it has to be parity. So

 

Andy Splichal:

If you have a location in that state?

 

Paul Rafelson:

it doesn't matter. Just the state government has to as a matter of policy, only but a different way. If the rule of thumb for offline is the retailer is the tax collector, then they can't say but for online, it's upstream to a supplier. Does that make sense? It still has to be the retailer. And if that retailer doesn't have nexus will Tough luck. That's the way the law was written. And our position is why Amazon was the retailer in all scenarios. So Amazon should have been collecting those taxes from day one. At all times. Not there was never this whole idea that the seller is an independent retailer was complete nonsense under state and local tax law. I mean, I've never seen anything like this in my life. I mean, billions of dollars lost money. So that's sort of the history of that I wrote an amicus brief one, the first thing it did was it started all nurses. We wrote a brief in the wayfarer case, which is a big sales tax case. we've filed a few lawsuits involving taxes since then we actually just won one in Pennsylvania. And this won't get I'll tell you a little bit about it. We just won the case like two to three weeks ago. That was a big constitutional wall when it basically said Amazon Fulfillment by Amazon, your your inventory. You know how it works with FBA? I don't know how well your audience is, you know, the broadness of your audience terms of how well they know the distinctions of Amazon versus Shopify. But with Amazon,

 

Andy Splichal:

No, they're, they're mostly they're mostly ecommerce sellers.

 

Paul Rafelson:

Okay. So they know that if you put your inventory in Amazon, it's not once that you may ship it to New York, but it's going to end up in a whole bunch of states. And the old thought process was, well, that means you have a physical tax obligation, your physical presence and every state in your inventory lands in, even if it's just for a short minute, and therefore you have a tax obligation, while the Pennsylvania Commonwealth Court looked at the case, they said under the US Constitution, Pennsylvania, United States Constitution, that's not enough presents. The fact that Amazon directs your inventory to other states does not put you in that state. That would be insanity, which is what, you know, I'm also tax professor, it taught at Carmel class on taxes in New York. So it's this kind of like a little bit of a topic that I'm very passionate about the right answer. So what if that's true, and obviously, there's still more to be done. We've got more cases and more states need to we need to win this matter on but it's the first court to actually rule on the issue. It means that really, an Amazon sellers Nexus is not defined by their FBA presence, let's call it right their presence in the Amazon warehouse. It's not but that was that's the general rule. And that's a scary concept. Because if you have nexus in every state where Amazon has a warehouse, there's a sales tax collection obligation, right. However, as you talked about earlier, Amazon's collecting the taxes now, thanks to what are known as marketplace facilitator laws that were, in my opinion, somewhat unnecessary, as applied to Amazon, but okay,

 

Andy Splichal:

Let me let me stop you right there. I got a question. So if that established Nexus, in every state that Amazon has a warehouse, I have a lot of private clients who sell both on Amazon and a Shopify or a big cloud or their own store, would that make you have nexus and have to charge tax on all of those states through your own store?

 

Paul Rafelson:

So this is my federal challenge that is currently happening in California. This is exactly the question. We're trying to get the answers to some states say yes, some states might say no. So for example, the rule of California is you have to have a half a million dollars of sales. And this is what's tripping people up. Nexus has a half a million dollars of sales, right? No transactions, just half a million dollars of sales to California triggers California Nexus, which seems like a very generous threshold, right? Hard to make a constitutional law case against somebody who's doing half a million in the state to say that they shouldn't have some obligation do something there, right? Seems reasonable. The problem is, if you their position is if you do one of 20 different things. That is an economic threshold, economic Nexus threshold, the physical presence threshold of yesteryear, the old quill threshold before the wayfarer case, still in their mind still applies. And states believe that that threshold still apply. So it's not economic Nexus worth is its federal presence, or economic Nexus is not. In other words, if you have any physical possessions to state whatsoever, it all goes out the window, the idea of these thresholds, they're not good protective measures, because the states are saying, well, you have physical presence. You're you had a widget land in a warehouse for five minutes. You have nexus, so you're, you're not protected by our $500,000 threshold, and we think that's unconstitutional. So we're actually challenging that right now in federal court as well. That's part of what we're challenging. And the Pennsylvania court really helped because they said, obviously, it's not enough to just say that some of your inventory is in Amazon's warehouse, but as a Shopify seller, and you put it in your own warehouse, I mean, it's a different story, right. And it's important because you can be a Shopify seller and an Amazon seller at the same time, as most of our clients and members are. Yeah, and if you don't understand your thresholds, that's why when I coach my Shopify clients on what the appropriate answer is for when to collect tax, it's a financial risks and rewards. It's a risk mitigation, not reward, there's no reward collecting tax, right, was a risk mitigation question. It's like, okay, if you're doing $50,000 of sales and the average tax rate, seven 7%. Let's just do some quick math. That means if you didn't collect tax, I mean, you could be out on average, give or take, this is all ballparking. Right? It's not legal advice. You could be out was that 3500 bucks if you didn't collect, but that's 300 bucks and all the states went after you and then you have to tack on some interest in penalties. But are all the states gonna go after you? And you start to break it down? He just do like a risk analysis and it's like, okay, well, do you want to spend You know, 1000s of dollars were like tax Avalara whatever jars, you know, to get compliant with Mississippi so that you can pay on $20 every year. You know, I had a friend who was, you know, he was a selling in Washington state has this b&o tax was like a sales tax, but it's on the, it's on you, not the customer, so you have to pay it. But the rates really low. It's like, not even a percent. Like it's like I think it was like two tenths of it's because it's it's on gross not net. So it's a very low tax rate. And I got a friend who say that they spent like six or $800 a year with with with tax dollars to pay that tax, but the total amount of tax was like 20 bucks. So like, I'd rather what the state like for 20. But if I if I'm gonna always say 20 What does they come after you? Right, right. Right. Yeah, no. interest and penalties are the cheaper? It's because they're not right. And if they do probably be cheaper. I mean, that's not my formal advice. But it's sort of a philosophy that I want, you know, that people need to consider is like, it's not, it's a constitutional question. It's not set in stone, that that's the right answer. Because one could argue, if it's costing you $800, to pay a state $20. It's not me, you as long as the states that have it wrong. That's the problem. It's there's the constitutional problem arising with how this whole thing is done. But it doesn't have a sales tax, we have to talk about income tax, too, if you want to get into taxes, because that's even scarier, because sales tax for Amazon sellers is kind of a dead issue for Shopify sellers, it's still an issue. And we have a proposed solution for it. But then on top of all this, they still want to get everybody for income tax, which is a big part of what our case is about. And that's

 

Andy Splichal:

Let's let's switch gears on the tax because I also want I also wanted to talk to you about one of your specialty is helping companies exit data business. You know, I mean, that's a dream of many sellers, their launch a business online, they build it up, they sell it for millions, they live in Fiji, but it doesn't sound like that's what you're seeing you're seeing most people are selling out of fear that they're gonna get shut down, or I guess what are you seeing and how are you representing those businesses as sellers?

 

Paul Rafelson:

Okay, so I want to be clear, I'm not a broker. Okay. I've thought about being a broker. And this, especially last year, last year, we had a real bubble, there was a huge private equity push into these companies that we're buying at Amazon brands, starting in late 2020 2021. We did $200 million, and Amazon exit deals for our clients. Right. So Amazon, meaning that these are predominantly Amazon sellers, they also had Shopify sites, right. But most of these clients were predominantly Amazon. That was just one of those. First for a small firm that's focused on you know, ecommerce for small and mid market. That's a lot, right. It's a lot of deals. So we've seen seen a ton. I don't want to underplay so you make a good point, go live in Fiji, where my clients living in Fiji, yes. But was their number was that their motivation to sell? It wasn't because, yes, they were getting millions of dollars, and they had that experience. But at the same time, they're like, I do make a lot of money. I do make $800,000 a year, right? Or I make a million dollars a year, I make 2 million year. That's pretty cool. And now they're gonna give me like, you know, I don't know, depending on how much money they make, right anywhere from, you know, if you make $800,000, you know, back last year, at the time, the multiples, you might have gotten close to 4 million closing cash, if you were lucky. If you're doing above a million or 2 million, you might get close to 10 million. Right? But then like, what do I do for the rest of my life? I don't want to do it. But their reasoning was, it was money, it was chips off the table. That's the motivation. So I don't want to I don't want to, you know, I don't nobody needs to, you know, bring out the violence for these people. They did great. You know, we were talking about, you know, these two holdings work with

 

Andy Splichal:

Why did they want to take chips off the table?

 

Paul Rafelson:

Because at any given moment, they were to Amazon reliant. These were companies that the only companies that were part of the bubble last year were the so in other words, these call them aggregators, right? So we're talking about the rasio, we're talking about razor we're talking about per se, these are companies that aggregate Amazon brands and think that they can sort of take advantage of economies of scale, right? By owning multiple Amazon brands at once. And you know, it's a lot of different strategies for why they want to do that. And they were very heavily funded. It was a thing it was a bit of a bubble last year and I say bubble, because this year, it's not nearly as active. It's kind of a sad story. But they are offering this this this, you know, amount of money. They were not looking for companies that were like if you were less than 65%, Amazon, they were kind of not interested because they didn't really know how to run Shopify, right? They're not like open source open source seems like it's sort of the opposite. Right? Open Source sort of this newer, better. hater that's coming in on the other side, we're gonna try to aggregate the Shopify stores, right? These aggregators just wanted to Amazon, they thought they could just, they thought they could just manip really manipulate Amazon, maybe I shouldn't use that word they can gain, you know, they thought they had it figured out, right? Maybe just pump up PPC Pay Per Click advertising. And that's all you got to do. I mean, I've literally heard that there are some aggregators that that they that was a strategy, they got, you know, 10s of millions of funding. And really, at the end of the day, that theory was just dump a bunch of money into Pay Per Click advertising, and we'll win. And sometimes it works. Sometimes it did. But they were coming in and, you know, our clients, were just basically saying, Yeah, I mean, I'm gonna take this offer, because at any given moment, Amazon can take my, my product to market.

 

Andy Splichal:

So it sounds like they were just cashing in on that bubble. Really?

 

Paul Rafelson:

They were cashing in the bubble, but for the reason of like,

 

Andy Splichal:

Because they didn't they were going to be shut shut down.

 

Paul Rafelson:

Right, if they knew that Amazon wasn't a risk that they didn't live in fear of like that, like, how are you going to say no to four or five, you know, three, four or five years of, you know, because that's how you vet measure value in these deals, you pay people in multiple journeys. So if you make half a million in your multiple is 4x. That's a $2 million deal. Right? How can you know, I may not have if you're living in fear that you may not actually have a business in four years, because Amazon might shut you down or compete against you or whatever, you know, it's, you know, starts to feel like, you know, my clients are telling me that this is their way to sleep at night. This gets misleading. Finally, so.... violent out. But yeah,

 

Andy Splichal:

So let's pull out in the future, what if? What do you see happening in 12 to 18 months? When it comes to e commerce, especially specifically, when it comes to selling on Amazon? Do you see sellers getting shut down where that could happen? Do you see it continuing to grow? I mean, where, you know, you're in the weeds with this, where where are you seeing things going?

 

Paul Rafelson:

What we're seeing well, so the antitrust stuff is working. Like I think Amazon's getting the message that governments are interested in this. They didn't pass the government didn't pass or any trust legislation, which I thought was weak anyway. So I'm not surprised. I'm not I don't think it was affected. Honestly, I was very vocal, we were very vocal that the interest legislation of the government was passing, we just was going to open up the whole situation to 10 years of litigation, nobody was going to win. What they weren't even going after the right elements. So I but I think at the same time, Amazon recognizes that the government seriously consider looking at this and they're under, they're under the microscope. So they're in having worked at Microsoft, I can tell you what it's like when you're working for a company under the microscope, you know, a lot of that competitive fire that you know, you say we're going to crush you like literally Coast out of the set, you can't even send emails with the word crushing it, right? Like, they don't want you to do that. So I can only imagine the environment going on Amazon right now where they're a little bit, being a little bit cautious about what they say, how they present things, what their strategy is, like, you know, they're not out to they're not out to crush Shopify, I don't believe that that's the case. So, I think but at the same time, we're seeing a lot of positive Amazon introduced this new account score, that's supposed to help prevent unnecessary suspensions. So we're seeing a lot of positive coming out. And so I'm hopeful because I hate the business. I'm like, the worst. I love my clients. I love helping them grow. My least favorite thing to have to deal with is Amazon. So we deal with it all the time and great team handles it. We do it the cheapest, I think possible, because we do a subscription model. But it's because I hate them industry. I think it's an awful thing. So the more Amazon invest in making it less likely and they did recently announced that their Amazon innovation conference last but two weeks ago, they announced a whole bunch of new stores, new technology, new tools are supposed to help you prevent suspensions, I think that's great. That's a win for solid. So we want we want to see that we want to see Amazon be proactive in taking this stuff seriously. And that's honestly that's the first step. I still think we need to sellers to unite. And I'm not a uniter I'm not I'm very good at like running hot. Like I used to do this as a job and other scenarios. I'm not the influencer rallying tight, but I think somebody who is to come in and join and be a part of this program and really help us get to a level where we can really just have our voice heard and really be one of the most powerful forces in in government and just have our people controlling the dialogue 24/7 in Congress, and we should be you know, Amazon went through a whole anti trust all these organizations popped up with all these agendas, and they're all well funded, you know, whether it was workers rights, you know, whether it was unions disguised as some you know, other you know, it was it was always something but we as the sellers as the online commerce will have no always like we we had minimal interactions, the fact is that we just knew the ending trust people from our prior working with them. So we had a very good line to them. But we didn't have that lobbying force that we needed. And that still needs to happen.

 

Andy Splichal

So let's talk about the online merchants guild. If business owners listening in and wants to join, they can join it, they can learn more about it. I mean, what's, what should somebody do if they're interested?

 

Paul Rafelson

A couple of things. So what I'm looking for is I'm looking for so I've been in charge this thing for a long time. And it's not really what I do as a volunteer. So I don't make even when we sue like, I don't take legal fees. It's not a fun, like, it's not a thing I do my pro bot, like I don't take money from The Guild. When we do legal court cases, I use all the money that comes in goes to pay our external legal counsel, or lobbyists or whatever we do a lot we've done, you know, we did a lot of lobbying around the tax laws, when it was a big issue with the Amazon stuff, and we fight these court cases. But what we need is we need money, and we need leaders, I want people to take the lead, I want people this is this isn't my or I just all I did was take that thing that every company I know in the world does, like I said, you know, we had a another tax example, we had a sugar tax proposal in Chicago, years and years ago, and you saw Starbucks, and Jamba Juice, and Coke and Pepsi, all Kumbaya, getting getting that overturned, right, right away, millions of dollars in funding right away to overturn turn a sugar tax in Chicago, it took literally a New York minute for them to get that, you know, together, get the funding, you know, we're how many million small business owners and yet we can't get funding like the LMG Nagar financial public records, you can see them the IRS is website, and there's are other websites and publish our funding dashboards, we don't really bring in that much money. If we did, we'd be extremely powerful. So I want leaders to come to literally contact me and say, I want to be a leader in this, I want to be part of this. It's very transparent, what we're doing, and we'll be there, you know, there's no secrecy. I just need those leaders. And of course, yes, give money, give 100 You know, the starting membership and the way the memberships it's here, it's we don't actually, you know, we created suggested membership levels. Back in the day, it's like, you know, if you weren't the biggest level, I think we asked for, like, $10,000 a year, if you're doing like millions and 10s of millions or something. But the starting membership was 100 bucks a year. So we're just like, you know, in other words, we're trying to make it like, easy for everyone to be a member, we don't literally check. We don't check you to say, Oh, you're bigger than that. Maybe we should. But, you know, we just want to drag up people to participate, join, it's a very powerful thing to you know, when you when you have an organization, you got people who in every district in every congressional district, it's very cool, you can do a lot and it's so powerful.

 

Andy Splichal

Is there a website they can check out? Where should they go?

 

Paul Rafelson

Online, just check out at onlinemerchantsguild.org. Yep. And I haven't actually been with the website in a while, but you know, it's there and has a join us. And you can just go in and make a sign up. And you can click donate, and make a contribution. And we'd love we'd appreciate it. But then again, we're looking for so I'm looking for definitely for small business owners, let's be a part of this. And, you know, so that we can grow this organization, but I want to get this organization over to people like I want more influencers in the E commerce space to come on board and really take begin, like, get on the board of this thing, you actually have to be an influencer on a board. But I want a nice mix on our on our ownership board to to, to really, you know, push the hell out, you know, people can really ignite this thing. When I was brought in here, I was brought in, again, with truly understanding that I would not be the igniter, I would just be the doer, which is what I like to do. I'm a lawyer by trade, I like to do what I do. But we just haven't had anyone Ignite. We thought we, you know, people who wanted to then they just kind of didn't want to and it was kind of sad. It was like, you know, we had a lot of momentum, and it kind of fizzled, people kind of fizzled out. Like I mean, I don't mean to be crass, like there are people who are like, you know, we'll tell you the last people to spend 5000 on a course. But they had uncomfortable asking people to spend $100 on nonprofit, trying to save the industry. And I'm like, What is going on? You know, and you go to big shows, and they're like, Can we get a booth and they're like, you have to spend $10,000 in the booth. I'm like, but I'm trying to save your industry. You know, I'm talking to trade show. I'm like I'm trying we're trying to save your industry. We're trying to meet keep your numbers high. Because if if if Shopify sellers have to, if let's go back to tax, if you have to account for six figures and tax consulting, tax compliance costs, we're not actually talking about taxes, but just how much it would cost you to comply with all the tax laws in the United States. Whether it's income tax, sales tax, property tax, franchise tags, like you're you're on a business before you start business, right, you're gonna realize pretty soon like you're gonna need some money in your back pocket just to cover all the accounting costs is expensive. I want people to realize just how burdensome that alone is. Right? And, and it's for like, that reason that we're trying to save the industry because like, that's where Congress is. That's not Congress. That's where the states are heading states are not acting in unison, they sort of have this shared Think Tank and like, for example, they published this guidance value less than a year ago. And they say, like, a chatbot is if you have a chat bot that answers customer questions on your website. So not a human being but a chatbot. Like that's considered Nexus Now, last day, wow. So like, we're screwed, we're screwed. Like if you look at what Congress is doing, I'm sorry, not Congress, what the states are doing and their infinite moronic wisdom and they are morons, because these are all like, old out of touch people who like literally still think that people pay for stuff on eBay with checks I swear to God, it's a true story. I was asked that question. And Amazon they thought that erratic Do people still do Amazon with the checks? I mean, that's how many what percentage of Amazon do people pay with the checks on the third party marketplace I was questioned, I was asked in 2017 I swear to God by a very influential person in a very influential state. It's it's scary, but these people are determining our future and if you let if nobody can keep them in check, we don't come up with better solutions. I mean, like E commerce, the industry is at risk. I mean, it's and that's what we're trying to fight we're the only merchants guild sits above like individual courses. And so that tribal is ation of like people I know people like different people. That's all fine. We love all of you we're not going to treat or domicile isn't about teaching you how to be successful. Ecommerce is about making sure that the opportunity to be successful e commerce is open to all that's we're about preserving that opportunity. Right keeping the portal open for everybody. Because it is one of the most revolutionary things if you ever think about right ecommerce what it did. Right? Think about the businesses that you have today, if you had started them in 1991, what you would how much money would you have to raise? Why would you have to go through you'd have to think about distribution. All these that you how would you have done this? Right? You'd be on a plane to Bentonville hoping Walmart or buy a ton of your stuff. And

 

Andy Splichal

No, it's amazing. It's definitely his made this era as opportunity that we have now, for all of us, whether it's marketers or merchants, just like something never been seen. Well, this has been a really fascinating interview, and I've loved hearing about the guild that you represented. We are about ready to have to wrap it up. Is there any final last words you would like to add? Before we close it down today?

 

Paul Rafelson

Yeah, I just want to say thank you, first of all, for the opportunity to be here. I love, you know, please feel free to reach out to us, we have one of the coolest things we offer through through our law firm answers network of others, this thing called sellerbasics.com. I'd invite you to check it out. It's a subscription program. And it's $9 a month and you can talk to lawyers, you talk to me, you can talk to our associates, our network of lawyers. And it's those calls are included, because I think lawyers Oh, you guys, we think that the legal industry owes a bit of apology. Right, I think we've scared the living crap out of people about what it takes to have a lawyer and unfortunately, what I've found and what my mission is, in terms of my private practice, and building celebrations is I'm in the mission to prevent people from letting bad advice, bad general advice destroy their business, because most of my clients who get into deep trouble, it's preventative, and we are a law firm, it's about an ounce of prevention we're about we don't litigate, we don't like to litigate, it's very bad. It's most of the time and affordable, we want you to get good advice on the front end, and the general stuff doesn't work. So I don't know how to make it any cheaper than $9 a month where you can

 

Andy Splichal

Just a subscription service and then you can call anytime you want. So

 

Paul Rafelson

You go to seller base.com, you schedule a call myself with my other lawyers with other law firms, depending on the subject matter human FDA question. You have a general How do I structure my business question on a tax question? These are legal questions, right? You know, and it also comes with free Amazon account suspension services, we don't charge for that. If you're a member and it's the it's more important to me, I would make more money not doing it. But it's more important for me to get people in the mindset of like, rather than you know, I know that people we hate the hourly the hour by hour. industry doesn't work right. It's too you know, and I understand why people don't trust it. So we're trying to really, you know, get people comfortable with hiring lawyers as my biggest competitor in this industry. There's not enough lawyers in my opinion, who cover ecommerce my biggest competitors that goes to my competitor biggest competitors DIY. That's that's what I'm concerned about. And my reason I hate those programs because they're wrong a lot. And it's it's they give you the penalty they don't even count as advice And they give you a lot of bad advice. So, you know, please, you know, check, you know, call us set up, set up a friendly checkout, call with us talking to your business, make sure you're doing everything good. Buy the book, let's take a look at it and see what's going on. And that way, you don't have any problems in the future. And you do that ounce of prevention. So that's my plea to you. And it's not just me. And even if you don't you start basically just call away or like just start working with lawyers. I think it's important. I think it's important that business owners realize that this ecommerce is cool, but it's also the most, you're you're not just you're a small global business, you're not a small business. You're a small global business, you're dealing with importing from China, you're selling nationally, internationally out of your kitchen table, as a kitchen table, small business. You got to be kidding me if you don't think you need a lawyer to help you at some point, just just just over your shoulder just to check on a few things. And I really encourage people to get that help, because so much tragedy that I see across my clients when they have really bad things happen. It's all preventable, you know? And so this is my way of saying like, how can we make it any easier for you to get comfortable working with lawyers again, that's what we're trying to do.

 

Andy Splichal

So that's great. We will make sure we get that link in the show notes below.

 

Paul Rafelson

Appreciate it. It was awesome to meet you. Thank you so much.

 

Andy Splichal

Well, that's great. Thanks for coming on today Paul.

 

Paul Rafelson

Appreciate you take care of all the best take care out there and listener land

 

Andy Splichal

For listeners. Remember if you liked this episode, please go to Apple podcasts and leave us an honest review. And if you're looking for more information regarding connecting with Paul or his service to be able to speak to a lawyer or his guild you will find the links all of them in the show notes below. In addition, if you're looking for more information on growing your business, check out our podcasts Resource Center available a podcast.makeeachclickcount.com. We have compiled all of our different past guests by show topic and included each have their contact information in case you would like more information at any of the services I have discussed during previous episodes. Well that's it for today. Remember to stay safe, keep healthy and happy marketing and I will talk to you in the next episode.