Green Dot 2010 Annual Report Download - page 32

System Services, in a timely manner if they were unwilling or unable to provide us with these services in the
future, and our business and operations could be adversely affected.
Our business could suffer if there is a decline in the use of prepaid cards as a payment
mechanism or there are adverse developments with respect to the prepaid financial ser-
vices industry in general.
As the prepaid financial services industry evolves, consumers may find prepaid financial services to
be less attractive than traditional or other financial services. Consumers might not use prepaid financial
services for any number of reasons, including the general perception of our industry. For example, negative
publicity surrounding other prepaid financial service providers could impact our business and prospects for
growth to the extent it adversely impacts the perception of prepaid financial services among consumers. If
consumers do not continue or increase their usage of prepaid cards, our operating revenues may remain at
current levels or decline. Predictions by industry analysts and others concerning the growth of prepaid
financial services as an electronic payment mechanism may overstate the growth of an industry, segment
or category, and you should not rely upon them. The projected growth may not occur or may occur more
slowly than estimated. If consumer acceptance of prepaid financial services does not continue to develop
or develops more slowly than expected or if there is a shift in the mix of payment forms, such as cash, credit
cards, traditional debit cards and prepaid cards, away from our products and services, it could have a
material adverse effect on our financial position and results of operations.
Fraudulent and other illegal activity involving our products and services could lead to rep-
utational damage to us and reduce the use and acceptance of our cards and reload
network.
Criminals are using increasingly sophisticated methods to engage in illegal activities involving our
cards or cardholder information, such as counterfeiting, fraudulent payment or refund schemes and
identity theft. We rely upon third parties for some transaction processing services, which subjects us and
our cardholders to risks related to the vulnerabilities of those third parties. A single significant incident of
fraud, or increases in the overall level of fraud, involving our cards and other products and services, could
result in reputational damage to us, which could reduce the use and acceptance of our cards and other
products and services, cause retail distributors or network acceptance members to cease doing business
with us or lead to greater regulation that would increase our compliance costs.
A data security breach could expose us to liability and protracted and costly litigation,
and could adversely affect our reputation and operating revenues.
We, the banks that issue our cards and our retail distributors, network acceptance members and third-
party processors receive, transmit and store confidential customer and other information in connection
with the sale and use of our prepaid financial services. Our encryption software and the other technologies
we use to provide security for storage, processing and transmission of confidential customer and other
information may not be effective to protect against data security breaches by third parties. The risk of
unauthorized circumvention of our security measures has been heightened by advances in computer
capabilities and the increasing sophistication of hackers. The banks that issue our cards and our retail
distributors, network acceptance members and third-party processors also may experience similar
security breaches involving the receipt, transmission and storage of our confidential customer and other
information. Improper access to our or these third parties’ systems or databases could result in the theft,
publication, deletion or modification of confidential customer and other information.
A data security breach of the systems on which sensitive cardholder data and account information are
stored could lead to fraudulent activity involving our products and services, reputational damage and
claims or regulatory actions against us. If we are sued in connection with any data security breach, we
could be involved in protracted and costly litigation. If unsuccessful in defending that litigation, we might be
forced to pay damages and/or change our business practices or pricing structure, any of which could have
a material adverse effect on our operating revenues and profitability. We would also likely have to pay (or
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