Overstock.com 2008 Annual Report Download - page 28

Table of Contents
Our business may be harmed if our car and real estate listing sites are used for unlawful transactions.
The law regarding the potential liability of an online listing service for automobile sales and real estate is not clear. The platform
of the listing service will be accessible to those subscribers who will have the ability to feature their cars and real estate listings for
sale and will supply the text descriptions of the vehicles, including the general condition of the vehicle and property and other
important information. We will have no ability beforehand to know if the information sellers provide is correct. While our site terms
and conditions of usage will prohibit unlawful acts, we cannot rule out the possibility that users of our car and real estate listing sites
will engage in unlawful transactions, or fail to comply with all laws and regulations applicable to them and their transactions. We may
be subject to allegations of civil or criminal liability for any unlawful activities conducted by such users. Any costs we incur as a result
of any such allegations, 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 car and real estate listing sites and disputes between users of our car and real estate listing sites
may harm our business.
We are aware that other companies operating online car and real estate listing services have periodically received complaints from
users alleging improprieties in connection with listings and occasionally these complaints may result in regulatory action. With any
online listing service there is the possibility that sellers may attempt to employ "bait and switch" techniques, attracting consumers with
advertisements of low cost, good condition vehicles in hopes of switching buyer interest to another less favorable vehicle or different
property once a potential purchaser responds. Additionally, sellers may attempt to sell vehicles and real estate without accurate
descriptions of the condition of the vehicles or real estate. We do not have the ability to require users of our services to fulfill their
obligations to make accurate disclosures or comply with consumer laws prohibiting "bait and switch" or other prohibited seller tactics.
We are aware that other companies providing similar services periodically receive complaints about the quality of the vehicles or real
estate they purchase, requesting reimbursement of amounts they have paid, threatening or commencing legal actions against the listing
service for damages. We may receive similar complaints, requests and communications, and encounter similar legal actions in
connection with our cars and real estate listing businesses, which may harm our business or reputation among consumers.
Risks Relating to our Community Site Business
Our community site business is a new business
Our Community site began operation in February 2006 with the introduction of Omuse, an Overstock supported, collaborative
writing platform. Omuse allows Community site users to read about and or write "guides" about a universe of subjects in which they
may have a particular expertise or interest. The Community site when fully deployed will also have services intended to establish user
forum participation, provide customers access to recent news about Overstock and allow users the opportunity to participate in forum
reading and writing, to create weblogs or post comments to the weblogs or "blogs" of other site users, or in our Omuse collaborative
writing platform. Presently Omuse is the only operating platform on the Community site. We cannot ensure that our expansion into
this business will succeed. It is a business which allows persons to contribute content within certain guidelines and subject to terms
and conditions. We cannot always be in a position to assure that our community users are abiding by these terms and conditions, or be
in a position to interdict or remove inappropriate or infringing material. Our entry into this business will require us to devote
substantial financial, technical, managerial and other resources to this site. It is uncertain whether we will benefit financially from the
Community site. The Community site will also expose us to additional risks, including legal and regulatory risks, including, but not
limited to, legal actions for possible intellectual property infringement, and claims for libel. Additionally, our entry into the
Community site service will require us to compete with established businesses having substantially greater experience in the
Community site service business and which have substantially greater resources than we have.
Risks Relating to the Internet Industry
Our success is tied to the continued use of the Internet and the adequacy of the Internet infrastructure.
Our future revenues and profits, if any, substantially depend upon the continued widespread use of the Internet as an effective
medium of business and communication. Factors which could reduce the widespread use of the Internet include:
• actual or perceived lack of security of information or privacy protection;
• possible disruptions, computer viruses or other damage to the Internet servers or to users' computers;
• significant increases in the costs of transportation of goods; and
• governmental regulation.
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