MasterCard 2012 Annual Report Download - page 38

our financial performance. Similarly, increased regulatory focus on our customers may cause such customers to
reduce the volume of transactions processed through our systems, which could reduce our revenues materially
and adversely impact our financial performance. Finally, failure to comply with the laws and regulations
discussed above to which we are subject could result in fines, sanctions or other penalties, which could materially
and adversely affect our overall business and results of operations, as well as have an impact on our reputation.
Regulation in the areas of consumer privacy, data use and/or security could decrease the number of
payment cards and devices issued and could increase our costs.
We are subject to regulations related to privacy and data protection and information security in the
jurisdictions in which we do business, and we could be negatively impacted by these regulations. Recently, these
topics have received heightened legislative and regulatory focus in jurisdictions around the world, in particular in
Europe, where the European Directive 95/46/EC is in the process of being revised. Regulation of privacy and
data protection and information security may raise concerns and scrutiny of our practices in regard to the
collection, use, disclosure or security of personal and sensitive information. Failure to comply with the privacy
and data protection and security laws and regulations to which we are subject could result in fines, sanctions or
other penalties, which could materially and adversely affect our results of operations and overall business, as well
as have an impact on our reputation. Any additional, or changes to, regulations in these areas (as well as the
manner in which such laws could be interpreted or applied) may also increase our costs to comply with such
regulations. Changes to these laws could also impact our business operations by requiring changes to our data
practices and could impact aspects of our business such as fraud monitoring and the development of information-
based products and solutions. In addition, these regulations may increase the costs of our customers to issue
payment products, which may, in turn, decrease the number of our cards and other payment devices that they
issue. Any of these changes could materially and adversely affect our overall business and results of operations.
Liabilities we may incur for any litigation that has been or may be brought against us could
materially and adversely affect our results of operations.
We are a defendant on a number of civil litigations and regulatory proceedings and investigations, including
among others, those alleging violations of competition and antitrust law. See Note 18 (Legal and Regulatory
Proceedings) to the consolidated financial statements included in Part II, Item 8 for more details regarding the
allegations contained in these complaints and the status of these proceedings. Except as otherwise discussed in
Note 18, we have not established reserves for any of the material legal proceedings in which we are currently
involved and we are unable to estimate at this time the amount of charges, if any, that may be required to provide
reserves for these matters in the future. In the event we are found liable in any of these material litigations or
proceedings, particularly in the event we may be found liable in a large class-action lawsuit or on the basis of an
antitrust claim entitling the plaintiff to treble damages or under which we were jointly and severally liable, we
could be subject to significant damages, which could materially and adversely affect our financial condition and
results of operations.
Limitations on our business resulting from litigation or litigation settlements may materially and
adversely affect our overall business and results of operations.
Certain limitations have been placed on our business in recent years because of litigation. For example, as
described above, as part of the terms of the settlement of the U.S. merchant class litigation entered into by the
Company in October 2012 (and subject to final court approval), the Company and Visa modified their no-
surcharge rules in January 2013 to permit U.S. merchants to surcharge credit cards, subject to certain limitations
(including ensuring that MasterCard or Visa cardholders are not unfairly subject to surcharging relative to
cardholders of competing credit card networks such as American Express, Discover and PayPal, should those
networks enforce rules that restrict surcharging). Any future limitations on our business resulting from litigation
or litigation settlements could reduce the volume of business that we do with our customers, which may
materially and adversely affect our overall business and results of operations.
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