Every year, thousands of students save money by renting textbooks online instead of buying them at the campus bookstore. What they might not realize is that taking their rented materials out of state could result in a hefty fee — at least if they rent from Amazon.
A recent article by Inside Higher Ed explores the fine print of Amazon’s Textbook Rental Terms & Conditions, and makes a surprising discovery: Customers renting books through Amazon subsidiary Warehouse Deals automatically agree to never bring a rented book out of the state to which it was originally shipped.
If Amazon believes a student has violated this rule, the company will, in its “sole discretion,” charge the renter the remainder of the book’s retail price. While this stipulation is clearly stated in Amazon’s terms and conditions, customers must click on two easy-to-miss links in order to reach the page where the information is located.
Why does Amazon place such a seemingly random restriction on textbook rentals? It has to do with the company’s long-running fight with state governments over sales tax. As Kenneth C. Green, founding director of the Campus Computing Project, explained to Inside Higher Ed:
“Presumably the concern is that if Amazon owns rented textbooks that cross state lines, state authorities could argue that Amazon has an official business presence in the state — a business presence that would require Amazon to collect and to pay state sales taxes.”
Amazon has been attempting to avoid state sales tax since the company’s inception by not holding a physical presence in most states where it does business. This strategy has paid huge dividends. According to Fortune, Amazon’s ability to not charge sales tax has given it a 10% pricing advantage over competitors who are unable to do so.
However, as Amazon’s revenues continue to grow, its tax evasion tactics are attracting increased attention. A University of Tennessee study estimated that states lost an estimated $11.4 billion in 2012 as a result of online retailers failure to collect the tax. As a result, states are making their objections more vocal.
Some governors have already responded with legislation meant to recoup these funds, resulting in a cat and mouse game between Amazon and certain state governments. When Minnesota Governor Mark Dayton approved a bill that would count independent bloggers and online affiliates as a physical business presence in his state — thus requiring Amazon to pay sales tax — the company called the bill “unconstitutional” and announced it would stop paying advertising fees to bloggers who directed traffic to Amazon in order to avoid the legislation’s effects. When legislatures passed similar laws in Connecticut and Arkansas, the company also shut down affiliate programs in those states as well.
It is unclear whether Amazon’s textbook rental policies, should they become widely known, would affect the retailer’s business. Inside Higher Ed reports that competitors Chegg and Rafter (which caters to institutions) do not restrict where a textbook can travel. A random search for textbooks on both Chegg and Amazon did not reveal significant price disparities.
Amazon’s tax fight, and therefore the company’s rental policies, might finally come to an end if congress passes the Marketplace Fairness Act. The bill, which the retailer supports, would allow states to collect sales tax from online retailers in exchange for simplifying local tax laws. The legislation has already passed the Senate, but is expected to have more trouble in the Republican-controlled House due to the GOP‘s distaste for tax increases.
However, until Amazon’s alters its rules, make sure you don’t bring a rented textbook back home for the weekend. Or, if you do, don’t let the company catch you in the act.