Avis 2012 Annual Report Download - page 26

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With respect to consumer privacy and data protection, laws in some countries and jurisdictions in which we operate limit the
types of information that we may be able to collect about individuals with whom we deal or propose to deal, as well as how
we collect, retain and use the information that we are permitted to collect, some of which is non-public personally identifiable
information. The centralized nature of our information systems requires the routine flow of information about customers and
potential customers across national borders, particularly in the United States and Europe. If this flow of information were to
become illegal, or subject to onerous restrictions, our ability to serve our customers could be seriously impaired for an
extended period of time. In addition, our failure to maintain the security of the data we hold, whether as a result of our own
error or the actions of others, could harm our reputation or give rise to legal liabilities leading to lower revenue, increased
costs and otherwise adversely impact our results of operations. In addition, the Payment Card Industry (the “PCI”) imposes
strict customer credit card data security standards to ensure that our customers’ credit card information is protected. Failure to
meet the PCI data security standards could result in substantial increased fees to credit card companies, other liabilities and/or
loss of the right to collect credit card payments
The aspect of our business that involves licensing third parties to operate locations under the Avis or Budget brands, in
exchange for the payment of a royalty, is regulated by various state franchising laws, as well as by the U.S. Federal Trade
Commission (the “FTC”). The FTC requires that we make extensive disclosure to prospective licensees but does not require
registration. A number of states require registration and/or disclosure in connection with licensing offers and sales. In
addition, several states have franchise relationship laws that could limit our ability to, among other things, terminate license
agreements or withhold consent to the renewal or transfer of these agreements. We are also subject to certain regulations
affecting our license arrangements in Europe and other international locations. Although our licensing operations have not
been materially adversely affected by such existing regulations, we cannot predict the effect of any future U.S. or
international legislation or regulations. Should our operations become subject to new laws or regulations that negatively
impact our ability to engage in franchising or licensing activities in current or new jurisdictions in which we operate, our
results of operations, profitability and financial condition could be adversely impacted.
In 2005, federal legislation was enacted that pre-empted state laws which imputed tort liability solely based on ownership of
a vehicle involved in an accident. If the current law were to change, our insurance liability exposure could materially
increase.
In 2010, the United States enacted significant health care reform laws, the constitutionality of which was affirmed by the U.S.
Supreme Court in 2012. Due to the breadth and complexity of the legislation, the current lack of implementing regulations
and interpretive guidance, the phased-in nature of the implementation, uncertainty regarding the effect of these laws on health
care costs generally, and uncertainty regarding how large employers will respond to the new laws and regulations, it is
difficult to predict the overall impact of these laws on our business over the coming years. Possible adverse effects of these
laws include increased costs, exposure to expanded liability, changes in our ability to attract or retain employees, and
requirements for us to revise the ways in which we conduct business.
The U.S. Congress and other legislative and regulatory authorities in the United States and internationally have considered,
and will likely continue to consider, numerous measures related to climate change and greenhouse gas emissions. Should
rules establishing limitations on greenhouse gas emissions or rules imposing fees on entities deemed to be responsible for
greenhouse gas emissions become effective, demand for our services could be affected, our fleet and/or other costs could
increase, and our business could be adversely affected.
We may be held responsible by regulators, courts or others for the actions of, or failures to act by, our licensees, dealers
or independent operators, which exposes us to possible fines, other liabilities and negative publicity.
Our car and truck rental licensee and dealer locations are independently owned and operated. We also operate many of our
Company-owned locations through agreements with “agency operators,” which are third-party independent contractors who
receive commissions to operate such locations. Our agreements with our licensees, dealers and agency operators (“third-party
operators”) generally require that they comply with all laws and regulations applicable to their businesses, including our
internal policies and standards. Under these agreements, third-party operators retain control over the employment and
management of all personnel at their locations. Regulators, courts or others may seek to hold us responsible for the actions of,
or failures to act by third-party operators. Although we actively monitor the operations of these third-party operators, and
under certain circumstances have the ability to terminate their agreements for failure to adhere to contracted operational
standards, we are unlikely to detect all problems. Moreover, there are occasions when the actions of third-party operators may
not be clearly distinguishable from our own. It is our policy to vigorously seek to be dismissed from any such claims
involving third-party operators and to pursue indemnity for any adverse outcomes that affect our Company. Failure of third-
party operators to comply with laws and regulations may expose us to liability, damages and publicity that may adversely