Green Dot 2012 Annual Report Download - page 22

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our subsidiary bank. Although there can be no assurance regarding the ultimate impact that adoption of these proposals
will have on us, if the proposals are enacted, we expect that the benefits we seek to realize from our recent bank
acquisition will be reduced.
Consumer Protection Laws
We are subject to state and federal consumer protection laws, including laws prohibiting unfair and deceptive
practices, regulating electronic fund transfers and protecting consumer nonpublic information. We believe that we have
appropriate procedures in place for compliance with these consumer protection laws, but many issues regarding our
service have not yet been addressed by the federal and state agencies charged with interpreting the applicable laws.
In order to permit the direct deposit of Federal benefits and other Federal funds to our products, we comply with
the requirements of the Electronic Fund Transfer Act of the Federal Reserve Board, or Regulation E, as they relate to
payroll cards, including disclosure of the terms of our electronic fund transfer services to consumers prior to their use
of the service, 21 days' advance notice of material changes, specific error resolution procedures and timetables, and
limits on customer liability for transactions that are not authorized by the consumer.
In June 2011, the Consumer Financial Protection Bureau, or CFPB, issued a notice and request for comment on
defining what kinds of companies should be included as “larger participants” for its nonbank supervision program. The
CFPB subsequently published its first "larger participant" proposed rule, in February 2012, defining nonbank “larger
participants” as entities engaged in consumer debt collection and consumer reporting. The CFPB published final rules
regarding “larger participants” engaged in consumer reporting and consumer debt collection in, respectively, July 2012
and October 2012. Although the CFPB did not include prepaid card issuers in these rules, the CFPB may take actions
in the future, including other rulemakings, that subject us or our products and services to its oversight and regulation.
In May 2012, the CFPB issued an Advanced Notice of Proposed Rulemaking seeking information from the public
regarding GPR cards. Although rules were not published in the Advanced Notice of Proposed Rulemaking, the CFPB
is focused on whether some or all of the provisions of Regulation E should apply to GPR cards and on the product
fees, disclosures and product features of GPR cards.
Payment Networks
In order to provide our products and services, we, as well as the banks that issue our cards, must register with
Visa and MasterCard and, as a result, are subject to payment network rules that could subject us to a variety of fines
or penalties that may be levied by the payment networks for certain acts or omissions. The banks that issue our cards
are specifically registered as “members” of the Visa and/or MasterCard payment networks. Visa and MasterCard set
the standards with which we and the card issuing banks must comply.
Employees
As of December 31, 2012, we had 596 employees, including 431 in general and administrative, 67 in sales and
marketing, and 98 in research and product development. None of our employees is represented by a labor union or
is covered by a collective bargaining agreement. We have never experienced any employment-related work stoppages
and consider relations with our employees to be good. As of December 31, 2012, we also had arrangements with
third-party call center providers in Guatemala and the Philippines that provided us with approximately 1,465 contractors
for customer service and similar functions.
ITEM 1A. Risk Factors
Risks Related to Our Business
Our operating results may fluctuate in the future, which could cause our stock price to decline.
Our quarterly and annual results of operations may fluctuate in the future as a result of a variety of factors, many
of which are outside of our control. If our results of operations fall below the expectations of investors or any securities
analysts who follow our Class A common stock, the trading price of our Class A common stock could decline
substantially. Fluctuations in our quarterly or annual results of operations might result from a number of factors,
including, but not limited to:
• the timing and volume of purchases, use and reloads of our prepaid cards and related products and services;
• the timing and success of new product or service introductions by us or our competitors;
• seasonality in the purchase or use of our products and services;
• reductions in the level of interchange rates that can be charged;
• fluctuations in customer retention rates;