Overstock.com 2007 Annual Report Download - page 35

signature. If we are unable to detect or control credit card fraud, our liability for these transactions could harm our business, results of operation or financial
condition.
If one or more states successfully assert that we should collect sales or other taxes on the sale of our merchandise or the merchandise of third parties
that we offer for sale on our Website, our business could be harmed.
We do not currently collect sales or other similar taxes for physical shipments of goods into states other than Utah. One or more local, state or foreign
jurisdictions may seek to impose sales tax collection obligations on us even though we are engaged in online commerce, and have no physical presence in
those jurisdictions. The future location of our fulfillment centers and customer service center networks, or any other operation of the company, establishing a
physical presence in states where we are not now present, may result in additional sales and other tax obligations. Our business could be adversely affected if
one or more states or any foreign country successfully asserts that we should collect sales or other taxes on the sale of our merchandise.
Existing or future government regulation could harm our business.
We are subject to the same federal, state and local laws as other companies conducting business on the Internet. Today there are relatively few laws
specifically directed towards conducting business on the Internet. However, due to the increasing popularity and use of the Internet, many laws and
regulations relating to the Internet are being debated at the state and federal levels. These laws and regulations could cover issues such as user privacy,
freedom of expression, pricing, fraud, quality of products and services, taxation, advertising, intellectual property rights and information security.
Applicability to the Internet of existing laws governing issues such as property ownership, copyrights and other intellectual property issues, taxation, libel,
obscenity and personal privacy could also harm our business. For example, United States and foreign laws regulate our ability to use customer information
and to develop, buy and sell mailing lists. The vast majority of these laws was adopted prior to the advent of the Internet and do not contemplate or address
the unique issues raised thereby. Those laws that do reference the Internet are only beginning to be interpreted by the courts and their applicability and reach
are therefore uncertain. These current and future laws and regulations could harm our business, results of operation and financial condition.
Laws or regulations relating to privacy and data protection may adversely affect the growth of our Internet business or our marketing efforts.
We are subject to increasing regulation at the federal, state and international levels relating to privacy and the use of personal user information. For
example, we are subject to various telemarketing laws that regulate the manner in which we may solicit future suppliers and customers. Such regulations,
along with increased governmental or private enforcement, may increase the cost of growing our business. In addition, many jurisdictions have laws that limit
the uses of personal user information gathered online or offline or require companies to establish privacy policies. The Federal Trade Commission has adopted
regulations regarding the collection and use of personal identifying information obtained from children under 13. Proposed legislation in this country and
existing laws in foreign countries require companies to establish procedures to notify users of privacy and security policies, obtain consent from users for
collection and use of personal information, and/or provide users with the ability to access, correct and delete personal information stored by us. Additional
legislation regarding data security and privacy has been proposed in Congress. These data protection regulations may restrict our ability to collect
demographic and personal information from users, which could be costly or harm our marketing efforts, and could require us to implement new and
potentially costly processes, procedures and/or protective measures.
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