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We may be subject to claims for representations made in connection with the sale and promotion of merchandise or for harm
experienced by customers who purchase merchandise from us.
The manner in which we sell and promote merchandise and related claims and representations made in connection with these efforts is
regulated by federal, state and local law. We may be exposed to potential liability from claims by purchasers or from federal, state and local
regulators and law enforcement agencies, including, but not limited to, for personal injury, product safety, wrongful death and damage to
personal property relating to merchandise sold and misrepresentation of merchandise features and benefits. In certain instances, we have the right
to seek indemnification for related liabilities from our vendors and may require such vendors to carry minimum levels of product liability and
errors and omissions insurance. These vendors, however, may be unable to obtain suitable coverage or maintain this coverage on acceptable
terms, or this insurance may provide inadequate coverage against all potential claims or may not even be available with respect to a particular
claim.
The processing, storage, use and disclosure of personal data could give rise to liabilities as a result of governmental regulation,
conflicting legal requirements or differing views of personal privacy rights.
In the processing of consumer transactions, we receive, transmit and store a large volume of personally identifiable information and other
user data. The sharing, use, disclosure and protection of this information are governed by the privacy and data security policies maintained by us.
Moreover, there are federal, state and international laws regarding privacy and the storing, sharing, use, disclosure and protection of personally
identifiable information and user data. Specifically, personally identifiable information is increasingly subject to legislation and regulations in
numerous jurisdictions around the world, the intent of which is to protect the privacy of personal information that is collected, processed and
transmitted in or from the governing jurisdiction. We could be adversely affected if legislation or regulations are expanded to require changes in
business practices or privacy policies, or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively
affect our business, financial condition and results of operations.
We are subject to online security risks, including security breaches and identity theft.
To succeed, we must be able to provide for secure transmission of confidential information over public networks. Our failure, and/or the
failure by the various third party vendors and service providers with which we do business, to comply with applicable privacy policies or federal,
state or similar international laws and regulations or any compromise of security that results in the unauthorized release of personally identifiable
information or other user data could damage the reputation of our businesses, discourage potential users from trying our products and services
and/or result in fines and/or proceedings by governmental agencies and/or consumers, one or all of which could adversely affect our business,
financial condition and results of operations. Any penetration of network security or other misappropriation or misuse of personal consumer
information could cause interruptions in the operations of our businesses and subject us to increased costs, litigation and other liabilities.
Security breaches could also significantly damage our reputation with consumers and third parties with whom we do business. We may be
required to expend significant capital and other resources to protect against and remedy any potential or existing security breaches and their
consequences. We also face risks associated with security breaches affecting third parties with which we are affiliated or otherwise conduct
business online.
Failure to effectively manage our Flexpay program could result in unplanned losses.
HSN offers Flexpay, pursuant to which customers may pay for certain merchandise in two to six interest-free, monthly credit or debit card
payments. We maintain allowances for estimated losses resulting from the inability of customers to make required payments. While actual losses
due to the inability of customers to make required payments have historically been within estimates, we may not continue to experience these
losses at the same rate as we have historically or our actual losses in any given period may exceed related estimates. As Flexpay usage grows, we
may experience these losses at greater rates, which will require us to maintain greater allowances for doubtful accounts of estimated losses than
we have historically.
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