Overstock.com 2012 Annual Report Download - page 21

Table of Contents
processing our customers' credit cards at any time, and have done so from time to time in the past. We are also subject to payment card associations'
operating rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or
impossible for us to comply. If we fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and lose our
ability to accept credit and debit card payments from our customers, process electronic funds transfers, or facilitate other types of online payments. In
addition, events affecting our credit card processors, including cyber-attacks, Internet or other infrastructure or communications impairment or other
events that could interrupt the normal operation of the credit card processors, could have a material adverse effect on our business.
We rely upon paid and natural search engines like Google, Bing, and Yahoo to rank our product offerings and may at times be subject to ranking
penalties if they believe we are not in compliance with their guidelines.
We rely on paid and natural search engines to attract consumer interest in our product offerings. Potential and existing customers use search
engines provided by search engine companies, including Google, Bing, and Yahoo, which use algorithms and other devices to provide users a natural
ranked listing of relevant Internet sites matching a user's search criteria and specifications. Generally, Internet sites ranked higher in the paid and natural
search results lists furnished to users attract the largest visitor share among similar Internet sites. Among retail Internet sites, those sites achieving the
highest natural search ranking often benefit from increased sales. Natural search engine algorithms use information available throughout the Internet,
including information available on our site. Rules and guidelines of these natural search engine companies govern our participation on their sites and
how we share relevant Internet information that may be considered or incorporated into the algorithms used by these sites. If these rules and guidelines
or the search engine algorithms change, or if we fail to present, or improperly present, our site information for use by natural search engine companies,
or if any of these natural search engine companies determine that we have violated their rules or guidelines, as Google did in February 2011 through
April 2011, or if others improperly present our site information to these search engine companies, we may fail to achieve an optimum ranking in natural
search engine listing results, or we may be penalized in a way that could harm our business.
We are subject to cyber security risks and may incur increasing costs in an effort to minimize those risks and to respond to cyber incidents.
Our business is entirely dependent on the secure operation of our website and systems as well as the operation of the Internet generally. Our
business involves the storage and transmission of users' proprietary information, and security breaches could expose us to a risk of loss or misuse of
this information, litigation, and potential liability. A number of large Internet companies have suffered security breaches, some of which have involved
intentional attacks. From time to time we and many other Internet businesses also experience denial of service attacks wherein attackers attempt to block
customers' access to our Website. If we are unable to avert a denial of service attack for any significant period, we could sustain substantial revenue loss
from lost sales and customer dissatisfaction. We may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of
cyber-attacks. Cyber attacks may target us, our customers, our suppliers, banks, credit card processors, delivery services, e-commerce in general or the
communication infrastructure on which we depend. If an actual or perceived attack or breach of our security occurs, customer and/or supplier perception
of the effectiveness of our security measures could be harmed and we could lose customers, suppliers or both. Actual or anticipated attacks and risks
may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, train employees, and engage third
party experts and consultants.
A person who is able to circumvent our security measures might be able to misappropriate our or our users' proprietary information, cause
interruption in our operations, damage our computers or
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