Classmates.com 2010 Annual Report Download - page 26

Table of Contents
support services or other vendors will be adequate. In addition to potential legal liability, these activities may adversely impact our reputation or
our revenues and may interfere with our ability to provide our products and services, all of which could adversely impact our business.
Changes in laws and regulations and new laws and regulations may adversely affect our business, financial condition, results of operations,
and cash flows.
We are subject to a variety of international, federal, state, and local laws and regulations, including, without limitation, those relating to
taxation, bulk email or "spam," advertising, including, without limitation, targeted or behavioral advertising, user privacy and data protection,
consumer protection, antitrust, and unclaimed property. Compliance with the various laws and regulations, which in many instances are unclear
or unsettled, is complex. New laws and regulations, such as those being considered or recently enacted by certain states related to automatic-
renewal practices, could impact certain of our business practices. Any changes in the laws and regulations applicable to us, the enactment of any
additional laws or regulations, or the failure to comply with, or increased enforcement activity of, such laws and regulations, could significantly
impact our products and services, our costs, or the manner in which we conduct business, all of which could adversely impact our results of
operations and cause our business to suffer.
Our online nostalgia and online loyalty marketing services, as well as our FTD segment's consumer business, rely heavily on email
campaigns, and any disruptions or restrictions on the sending of emails or increase in the associated costs could adversely affect our
business and results of operations.
Our emails have historically generated the majority of the traffic on our online nostalgia websites and are the most important driver of
member activity for our online loyalty marketing service. A significant number of members of our online nostalgia and online loyalty marketing
services elect to opt-
out of receiving certain types of emails. Without the ability to email these members, we have very limited means of inducing
members to return to our websites and utilize our services. In addition, each month, a significant number of email addresses for members of our
online nostalgia and online loyalty marketing services become invalid. This disrupts our ability to email these members and also prevents our
online nostalgia members from being able to contact these members, which is one of the reasons why members use our online nostalgia services.
Our FTD segment generates a significant portion of its consumer orders from the emails we send to customers who have previously ordered
products from us. We also engage in a number of third-
party email marketing campaigns in which such third parties include our marketing offers
in the emails they send.
An increase in the number of members or customers who elect to not receive, or are unable to receive, our emails could adversely affect our
business and results of operations. From time to time, Internet service providers block bulk email transmissions or otherwise experience
technical difficulties that result in our inability to successfully deliver emails to our members or customers. Third parties may also block, impose
restrictions on, or start to charge for, the delivery of emails through their email systems. Due to the importance of email to our businesses, any
disruption or restriction on the distribution of emails or increase in the associated costs could materially and adversely affect our revenues and
profitability.
We may be unsuccessful at acquiring additional businesses, services or technologies. Even if we complete an acquisition, it may not improve
our results of operations and may also adversely impact our business, financial condition and cash flows.
One of our strategic objectives is to acquire businesses, services or technologies that will provide us with an opportunity to diversify the
products and services we offer, leverage our assets and core
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