Home Shopping Network 2011 Annual Report Download - page 9

cases, confirm the availability of inventory and establish and manage personal accounts. Customers may
communicate directly with customer service via e-mail or by telephone with call center representatives available
seven days a week.
Government Regulation
We market and offer a broad range of merchandise through television, online, catalogs and other channels.
The manner in which we promote and sell merchandise, including claims and representations made in connection
with these efforts, is regulated by a wide variety of federal, state and local laws, regulations, rules, policies and
procedures. Some examples of these that affect the manner in which we sell and promote merchandise or
otherwise operate our businesses include, but are not limited to, the following:
• The Federal Trade Commission’s regulations related to the sale of products and/or commercial contacts
with our customers or potential customers, such as the Telemarketing Sales Rule and Do Not Call;
• The Food and Drug Administration’s regulations regarding marketing claims that can be made about
cosmetic beauty products and over-the-counter drugs, which include products for treating acne or
medical products, and claims that can be made about food products; and
• Regulations related to product safety issues and product recalls including, but not limited to, the
Consumer Product Safety Act, the Consumer Product Safety Improvement Act of 2008, the Federal
Hazardous Substance Act, the Flammable Fabrics Act and regulations promulgated pursuant to these
acts.
These laws, regulations, rules, policies and procedures are subject to change at any time. Unfavorable
changes applicable to us could decrease demand for merchandise offered by us, increase costs which we may not
be able to offset, subject us to additional liabilities and/or otherwise adversely affect our businesses.
Since October 1996, HSN has been subject to a consent order issued by the Federal Trade Commission, or
FTC, which terminates on the later of April 15, 2019, or 20 years from the most recent date that the United States
or the FTC files a complaint in federal court alleging any violation thereunder. Pursuant to this consent order, we
are prohibited from making claims for specified categories of products, including claims that a given product can
cure, treat or prevent any disease or have an effect on the structure or function of the human body, unless we
have competent and reliable scientific evidence to substantiate such claims. Violation of this consent order may
result in the imposition of significant civil penalties for non-compliance and related redress to consumers and/or
the issuance of an injunction enjoining us from engaging in prohibited activities. The FTC periodically
investigates our business and operations on an ongoing basis for purposes of determining our compliance with
the consent order.
Online sales must comply with a variety of existing and new federal and state laws dealing with privacy,
intellectual property, taxation, the provision of online payment services and electronic contracts. While U.S.
Supreme Court decisions generally restrict the imposition of obligations to collect state and local sales and use
taxes with respect to sales made over the internet in states in which internet retailers have no nexus, a number of
states have adopted or are considering initiatives that would impose sales and use tax collection obligations
arising from internet-based transactions. The imposition by the federal or state and local governments of various
taxes and related obligations upon internet commerce could create administrative burdens for our businesses,
could put our businesses at a competitive disadvantage to the extent that similar obligations are not imposed upon
our competitors and could decrease future sales.
While we believe that the practices of our businesses have been structured in a manner to ensure compliance
with these laws and regulations; federal, state or local regulatory authorities may take a contrary position. Our
failure to comply with these laws and regulations could result in proceedings against us, fines and penalties and/
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