Hertz 2009 Annual Report Download - page 56

ITEM 1A. RISK FACTORS (Continued)
a material adverse effect on our consolidated financial position, results of operations or cash flows. See
‘‘Item 1—Business—Governmental Regulation and Environmental Matters’’ in this Annual Report.
Changes in the U.S. and foreign legal and regulatory environment that affect our operations,
including laws and regulations relating to the insurance products we sell, consumer privacy, data
security, employment matters, taxes, automobile-related liability and insurance rates, could
disrupt our business, increase our expenses or otherwise have an adverse impact on our results of
operations.
We are subject to a wide variety of laws and regulations in the United States and the other countries and
jurisdictions in which we operate, and changes in the level of government regulation of our business
have the potential to materially alter our business practices and adversely affect our financial position
and results of operations, including our profitability. Depending on the jurisdiction, those changes may
come about through new legislation, the issuance of new laws and regulations or changes in the
interpretation of existing laws and regulations by a court, regulatory body or governmental official.
The optional liability insurance policies and products providing insurance coverage in our domestic car
rental operations are conducted pursuant to limited licenses or exemptions under state laws governing
the licensing of insurance providers. In our international car rental operations, our offering of optional
products providing insurance coverage historically has not been regulated. See ‘‘Item 1—Business—
Risk Management’’ for further discussion regarding how changes in the regulation of insurance
intermediaries may affect us internationally. Any changes in U.S. or foreign law that change our
operating requirements with respect to optional insurance products could increase our costs of
compliance or make it uneconomical to offer such products, which would lead to a reduction in revenue
and profitability. If customers decline to purchase supplemental liability insurance products from us as a
result of any changes in these laws or otherwise, our results of operations could be materially adversely
affected.
Laws in many countries and jurisdictions limit the types of information we may collect about individuals
with whom we deal or propose to deal, as well as how we collect, retain and use the information that we
are permitted to collect. In addition, the centralized nature of our information technology systems
requires the routine flow of information about customers and potential customers across national
borders, particularly into the United States. The regulations applicable to privacy and data security are
rapidly evolving, and additional regulation in those areas, some of it potentially difficult for us to
accommodate, is frequently proposed and occasionally adopted. Thus, changes in the worldwide legal
and regulatory environment in the areas of customer privacy, data security and cross-border data flows
could have a material adverse effect on our business, primarily through the impairment of our marketing
and transaction processing activities, and the resulting costs of complying with such requirements. It is
also possible that we could face significant liability for failing to comply with any such existing, or new,
requirements.
In most places where we operate, we pass through various expenses, including the recovery of vehicle
licensing costs and airport concession fees, to our rental customers as separate charges. We believe
that our expense pass-throughs, where imposed, are properly disclosed and are lawful. Generally
speaking, expense pass-throughs have, when challenged, been upheld in court. We may in the future be
subject to potential legislative changes or administrative action which could limit, restrict and/or prohibit
our ability to separately state, charge and recover such costs, which would result in an adverse cost
reallocation. If such actions were taken, it could have a material adverse impact on our revenues and
results of operations.
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