Vistaprint 2012 Annual Report Download - page 26

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Failure to protect our networks and the confidential information of our customers against security
breaches and to address risks associated with credit card fraud could damage our reputation and brands
and substantially harm our business and results of operations.
Online commerce and communications depend on the secure transmission of confidential information over
public networks. Currently, a majority of our sales are billed to our customers' credit card accounts directly, and we
retain our customers' credit card information for a period of time that varies depending on the services we provide to
each customer. Any compromise or breach of our network or the technology that we use to protect our network and
our customer transaction data, such as credit card information, could damage our reputation and brand and expose
us to losses, litigation, and possible liability. Although we maintain network security insurance, we cannot be certain
that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us
on reasonable terms, or at all. In addition, anyone who is able to circumvent our security measures could
misappropriate our proprietary information or cause interruptions in our operations. We may need to expend
significant resources to protect against security breaches or to address problems caused by breaches. In addition,
some of our partners also collect information from transactions with our customers, and we may be liable or our
reputation may be harmed if our partners fail to protect our customers' information or use it in a manner that is
inconsistent with our practices.
We may also be liable for fraudulent transactions conducted on our websites, such as through the use of
stolen credit card numbers. To date, quarterly losses from payment fraud have not exceeded 1% of total revenues
in any quarter, but we continue to face the risk of significant losses from this type of fraud. Our failure to limit
fraudulent credit card transactions could damage our reputation and brand and substantially harm our business and
results of operations.
We depend on search engines to attract a substantial portion of the customers who visit our websites, and
losing these customers would adversely affect our business and results of operations.
Many customers access our websites by clicking through on search results displayed by search engines
such as Google, Bing, and Yahoo!. If the search engines on which we rely modify their algorithms, terminate their
relationships with us, or increase the prices at which we may purchase listings, this could increase our costs and
result in fewer customers clicking through to our websites. If fewer customers click through to our websites, we
could be required to resort to other more costly resources to replace this traffic, which could adversely affect our
revenues and operating and net income and could harm our business.
In addition, some of our competitors purchase the term “Vistaprint” and other terms incorporating our
proprietary trademarks from Google and other search engines as part of their search listing advertising. Courts do
not always side with the trademark owners in cases involving search engines, and Google has refused to prevent
companies from purchasing search results that use the trademark “Vistaprint.” As a result, we may not be able to
prevent our competitors from advertising to, and directly competing for, customers who search for the term
“Vistaprint” on search engines.
Various private 'spam' blacklisting and similar entities have in the past, and may in the future, interfere with
our e-mail solicitation, the operation of our websites and our ability to conduct business.
We depend significantly on e-mail to market to and communicate with our customers. Various private
entities attempt to regulate the use of e-mail for commercial solicitation, and some of these entities maintain
“blacklists” of companies that do not adhere to what the blacklisting entity believes are appropriate standards of
conduct or practices for commercial e-mail solicitations, which are often more stringent than currently legal
requirements. Although we believe that our commercial e-mail solicitations comply with all applicable laws, some of
our Internet protocol addresses appear on various private entities' blacklists from time to time, which means that e-
mails sent from those addresses may be blocked if they are sent to any Internet domain or Internet address that
subscribes to the blacklisting entity's service or purchases its blacklist. The blacklisting sometimes interferes with
our ability to send operational e-mails-such as password reminders, invoices and electronically delivered products-
to customers and others, and to send and receive emails to and from our corporate email accounts. In addition, as
a result of being blacklisted, we have had disputes with, or concerns raised by, various service providers who
perform services for us, including co-location and hosting services, Internet service providers and electronic mail