Overstock.com 2005 Annual Report Download - page 27

Download and view the complete annual report

Please find page 27 of the 2005 Overstock.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 118

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118

Our business may be harmed if our auction site is used for unlawful transactions.
The law regarding the potential liability of an online auction service for the activities of its users is not clear. We prohibit the
listing of numerous categories of items in an effort to reduce the possibility that users of our auction site will engage in an unlawful
transaction. However, we cannot assure that users of the site will comply with all laws and regulations applicable to them and their
transactions, and we may be subject to allegations of civil or criminal liability for any unlawful activities conducted by them. Any
costs we incur as a result of any such allegations, or as a result of actual or alleged unlawful transactions utilizing our site, or in our
efforts to prevent any such transactions, may harm our business. In addition, any negative publicity we receive regarding any such
transactions or allegations may damage our reputation, our ability to attract new customers to our main shopping site, and the
Overstock.com brand name generally.
Fraudulent activities using our auctions site and disputes between users of our auctions site may harm our business.
We are aware that other companies operating online auction services have periodically received complaints from users alleging
that they have not received the purchase price or the goods they expected to receive, and that in some cases users have been arrested
and convicted for engaging in fraudulent activities using those companies' auction sites. We may receive similar complaints. We do
not have the ability to require users of our services to fulfill their obligations to make payments or to deliver items. We are aware that
other companies periodically receive complaints from buyers about the quality of the items they purchase, requests for reimbursement
of amounts paid, and communications threatening or commencing legal actions against them. We may receive similar complaints,
requests and communications in connection with our auctions site business.
We are subject to risks associated with information transmitted through our service.
The law relating to the liability of online services companies for information carried on or disseminated through their services is
currently unsettled. Claims could be made against online services companies under both U.S. and foreign law for defamation, libel,
invasion of privacy, negligence, copyright or trademark infringement, or other theories based on the nature and content of the
materials disseminated through their services. We are aware that private lawsuits seeking to impose liability under a number of these
theories have been brought against other companies operating auction sites. In addition, domestic and foreign legislation has been
proposed that would prohibit or impose liability for the transmission over the Internet of certain types of information. Our service
permits users to make comments regarding other users. Although all such comments are generated by users and not by us, we are
aware that claims of defamation or other injury have been made against other companies operating auction services in the past and
could be made in the future against us for comments made by users. Recent court decisions have narrowed the scope of the immunity
provided to Internet service providers like us under the Communications Decency Act. This trend, if continued, may increase our
potential liability to third parties for the user-provided content on our site.
Difficulties or negative publicity associated with our auctions business could affect our main shopping site business.
Any significant operational or other difficulties we encounter with our auctions business could damage our reputation, our ability
to attract new customers to our main shopping site, and the Overstock.com brand name generally. Negative publicity resulting from
actual or alleged fraudulent or deceptive conduct by users of our auctions site could also damage our reputation, our ability to attract
new customers to our main shopping site, and the Overstock.com brand name generally.
24