Overstock.com 2004 Annual Report Download - page 29

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we may be liable for fraudulent credit card transactions because we do not obtain a cardholder's signature. If we are unable to detect or control credit card
fraud, our liability for these transactions could harm our business, results of operation or financial condition.
If one or more states successfully assert that we should collect sales or other taxes on the sale of our merchandise or the merchandise of third parties
that we offer for sale on our Websites, our business could be harmed.
We do not currently collect sales or other similar taxes for physical shipments of goods into states other than Utah or Indiana. One or more local, state or
foreign jurisdictions may seek to impose sales tax collection obligations on us and other out-of-state companies that engage in online commerce. Our business
could be adversely affected if one or more states or any foreign country successfully asserts that we should collect sales or other taxes on the sale of our
merchandise.
Existing or future government regulation could harm our business.
We are subject to the same federal, state and local laws as other companies conducting business on the Internet. Today there are relatively few laws
specifically directed towards conducting business on the Internet. However, due to the increasing popularity and use of the Internet, many laws and
regulations relating to the Internet are being debated at the state and federal levels. These laws and regulations could cover issues such as user privacy,
freedom of expression, pricing, fraud, quality of products and services, taxation, advertising, intellectual property rights and information security.
Applicability to the Internet of existing laws governing issues such as property ownership, copyrights and other intellectual property issues, taxation, libel,
obscenity and personal privacy could also harm our business. For example, United States and foreign laws regulate our ability to use customer information
and to develop, buy and sell mailing lists. The vast majority of these laws was adopted prior to the advent of the Internet, and do not contemplate or address
the unique issues raised thereby. Those laws that do reference the Internet, such as the Digital Millennium Copyright Act and the CAN-SPAM Act of 2003,
are only beginning to be interpreted by the courts and their applicability and reach are therefore uncertain. These current and future laws and regulations could
harm our business, results of operation and financial condition.
Laws or regulations relating to privacy and data protection may adversely affect the growth of our Internet business or our marketing efforts.
We are subject to increasing regulation at the federal, state and international levels relating to privacy and the use of personal user information. For
example, we are subject to various telemarketing laws that regulate the manner in which we may solicit future suppliers and customers. Such regulations,
along with increased governmental or private enforcement, may increase the cost of growing our business. In addition, several states have proposed legislation
that would limit the uses of personal user information gathered online or require online services to establish privacy policies. The Federal Trade Commission
has adopted regulations regarding the collection and use of personal identifying information obtained from children under 13. Bills proposed in Congress
would extend online privacy protections to adults. Moreover, proposed legislation in this country and existing laws in foreign countries require companies to
establish procedures to notify users of privacy and security policies, obtain consent from users for collection and use of personal information, and/or provide
users with the ability to access, correct and delete personal information stored by us. We could become a party to a similar enforcement proceeding. These
data protection regulations and enforcement efforts may restrict our ability to collect demographic and personal information from users, which could be costly
or harm our marketing efforts.
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