MoneyGram 2008 Annual Report Download - page 21

Table of Contents
We face fraud risks that may increase as a result of an economic downturn and that could adversely affect our business, financial
condition and results of operations.
Criminals are using increasingly sophisticated methods to engage in illegal activities such as paper instrument counterfeiting, fraud and
identity theft. As we make more of our services available over the Internet, we subject ourselves to new types of consumer fraud risk
because requirements relating to customer authentication are more complex with Internet services. Certain former retail agents have also
engaged in fraud against us, and existing agents could engage in fraud against us. We use a variety of tools to protect against fraud;
however, these tools may not always be successful.
It is possible that negative economic conditions would result in increased agent or consumer fraud. If consumer fraud levels involving our
services were to rise, it could lead to regulatory intervention and reputational and financial damage. This, in turn, could reduce the use
and acceptance of our services or increase our compliance costs and thereby have a material adverse impact on our business, financial
condition and results of operations.
If we fail to successfully develop and timely introduce new and enhanced products and services or we make substantial investments in
an unsuccessful new product, service or infrastructure change, our business, prospects, financial condition and results of operations
could be adversely affected.
Our future growth will depend, in part, on our ability to continue to develop and successfully introduce new and enhanced methods of
providing money transfer, money order, official check, bill payment and related services that keep pace with competitive introductions,
technological changes and the demands and preferences of our agents, financial institution customers and consumers. Many of our
competitors offer electronic payment mechanisms, including Internet-based and cellular phone payment services, that could be
substituted for traditional forms of payment, such as the money order, bill payment and money transfer services that we offer. If these
alternative payment mechanisms become widely substituted for our products and services, and we do not develop and ramp up similar
alternative payment mechanisms successfully and on a timely basis, our business and prospects could be adversely affected. Additionally,
we may make future investments or enter into strategic alliances to develop new technologies and services or to implement infrastructure
change to further our strategic objectives, strengthen our existing businesses and remain competitive. Investments in new technologies
and infrastructure and strategic alliances are inherently risky and we cannot guarantee that such investments will be successful or will not
have a material adverse effect on our business, financial condition and results of operations.
If we are unable to adequately protect our brand and the intellectual property rights related to our existing and any new or enhanced
products and services, or if we are unable to avoid infringing on the rights of others, our business, prospects, financial condition and
results of operations could be adversely affected.
The MoneyGram® brand is important to our business. We utilize trademark registrations in various countries and other tools to protect
our brand. Our business would be harmed if we were unable to adequately protect our brand, and the value of our brand were to decrease
as a result.
We rely on a combination of patent, trademark and copyright laws, trade secret protection and confidentiality and license agreements to
protect the intellectual property rights related to our products and services. We also investigate the intellectual property rights of third
parties to prevent our infringement of those rights. We may be subject to claims of third parties that we infringe their intellectual property
rights or have misappropriated other proprietary rights. We may be required to spend resources to defend any such claims or to protect
and police our own rights. Some of our intellectual property rights may not be protected by intellectual property laws, particularly in
foreign jurisdictions. The loss of our intellectual property protection, the inability to secure or enforce intellectual property protection or
to successfully defend against an intellectual property infringement action could harm our business and prospects.
We face intense competition, and if we are unable to continue to compete effectively, our business, financial condition and results of
operations would be adversely affected.
The markets in which we compete are highly competitive, and we face a variety of competitors across our businesses. In addition, new
competitors or alliances among established companies may emerge. With respect to our
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