Chegg 2013 Annual Report Download - page 77

adopted privacy guidelines with respect to mobile applications. Our business, including our ability to operate
internationally, could be adversely affected if legislation or regulations are adopted, interpreted, or implemented
in a manner that is inconsistent with our current business practices and that require changes to these practices, the
design of our websites, mobile applications, products, features or our privacy policy. In particular, the success of
our business has been, and we expect will continue to be, driven by our ability to responsibly use the data that
students share with us. Therefore, our business could be harmed by any significant change to applicable laws,
regulations or industry standards or practices regarding the use or disclosure of data that students choose to share
with us, or regarding the manner in which the express or implied consent of consumers for such use and
disclosure is obtained. Such changes may require us to modify our products and features, possibly in a material
manner, and may limit our ability to develop new products and features that make use of the data that we collect
about our student users.
Our reputation and relationships with students would be harmed if our student users’ data, particularly billing
data, were to be accessed by unauthorized persons.
We maintain personal data regarding our student users, including names and, in many cases, mailing
addresses. We take measures to protect against unauthorized intrusion into our student users’ data. If, despite
these measures, we or our payment processing services experience any unauthorized intrusion into our student
users’ data, current and potential student users may become unwilling to provide the information to us necessary
for them to engage with our platform, we could face legal claims and our business could be adversely affected.
The breach of a third-party’s website, resulting in theft of user names and passwords, could result in the
fraudulent use of that user login information on our platform. Similarly, if a well-publicized breach of the
consumer data security of any other major consumer website were to occur, there could be a general public loss
of confidence in the use of the Internet for commerce transactions which could adversely affect our business. In
addition, we do not obtain signatures from students in connection with the use of credit cards by them. Under
current credit card practices, to the extent we do not obtain cardholders’ signatures, we are liable for fraudulent
credit card transactions, even when the associated financial institution approves payment of the orders. From
time to time, fraudulent credit cards may be used. While we do have safeguards in place, we nonetheless may
experience some loss from these fraudulent transactions. A failure to adequately control fraudulent credit card
transactions would harm our business and results of operations.
If we become subject to liability for the Internet content that we publish or that is uploaded to our websites by
students, our results of operations could be adversely affected.
As a publisher and distributor of online content, we face potential liability for negligence, copyright or
trademark infringement or other claims based on the nature and content of materials that we publish or distribute.
We also may face potential liability for content uploaded by students in connection with our community-related
content or course reviews. If we become liable, then our business may suffer. Third parties may initiate litigation
against us without warning. Others may send us letters or other communications that make allegations without
initiating litigation. We have in the past and may in the future receive such communications, which we assess on
a case-by-case basis. We may elect not to respond to the communication if we believe it is without merit or we
may attempt to resolve disputes out-of-court by removing content or services we offer or paying licensing or
other fees. If we are unable to resolve such disputes, litigation may result. Litigation to defend these claims could
be costly and harm our results of operations. We cannot assure you that we are adequately insured to cover
claims of these types or indemnified for all liability that may be imposed on us. Any adverse publicity resulting
from actual or potential litigation may also materially and adversely affect our reputation, which in turn could
adversely affect our results of operations.
In addition, the Digital Millennium Copyright Act, or DMCA, has provisions that limit, but do not
necessarily eliminate, our liability for caching or hosting, or for listing or linking to, third-party websites that
include materials or other content that infringe copyrights or other intellectual property or proprietary rights,
provided we comply with the strict statutory requirements of this Act. The interpretations of the statutory
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