Overstock.com 2008 Annual Report Download - page 27

Table of Contents
Fraudulent activities using our auctions business and disputes between users of our auctions business 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 business.
We are subject to risks associated with information transmitted through our auctions 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 auctions
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 business could also damage our reputation, our ability to
attract new customers to our main shopping site, and the Overstock.com brand name generally.
Risks Relating to our Cars Site and Real Estate Businesses
Our cars site and real estate businesses are new businesses.
Our car listing site and real estate listing businesses began operation in December 2006 and August 2008, respectively. The listing
sites are listing services for automobile and real estate sellers. The online car listing service and real estate listing service are
relatively new businesses for us. We cannot ensure that our expansion into these businesses will succeed. Our entry into these
businesses will require us to devote substantial financial, technical, managerial and other resources to this car listing and real estate
listing sites. It will also expose us to additional risks, including legal and regulatory risks, and it will require us to compete with
established businesses having substantially greater experience in the online car listing and real estate listing service businesses and
substantially greater resources than we have.
Our car listing and real estate listing businesses may be subject to a variety of regulatory requirements.
Many states and other jurisdictions, including Utah, where we are located, have regulations governing the conduct of car sellers
and real estate agents and public advertisement for car and real estate sales. Generally, these regulations govern the conduct of those
sellers advertising their automobiles for sale and real estate listing for sale and are not directly applicable to those providing the
medium through which the advertisement is made available to the public. Sellers are often subject to regulations in the nature of "truth
in advertising laws." The application of these regulations to online car listing service and real estate listing providers is not clear.
Although we do not expect these laws to have a significant effect on our listing businesses, we will incur costs in researching and
complying with these laws, and we may from time to time be required to make changes in our businesses that may increase our costs,
reduce our revenues, cause us to prohibit certain listing or advertising practices, or make other changes that may adversely affect our
car and real estate listing businesses.
Current and future laws could affect our car and real estate listing businesses.
Like our shopping business, our car and real estate listing services are subject to the same laws and regulations that apply to other
companies conducting business on and off the Internet. In addition, our car and real estate listing services may be affected by other
laws and regulations, such as those that expressly apply to advertising automobiles and real estate for sale. To the extent that such
current or future laws or regulations prevent users from selling items on our car and real estate listing sites, they could harm our
business.
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