Overstock.com 2009 Annual Report Download - page 37

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Table of Contents
on our auction site, or to the extent these laws discriminate against internet auctions or apply in a discriminatory fashion, they could harm our business.
Our business may be harmed if our auctions business 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, as a result of actual or alleged unlawful
transactions using 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 business and disputes between users of our auctions business may harm our business.
We 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 do not have the
ability to require users of our services to fulfill their obligations to make payments or to deliver items. We periodically receive complaints from buyers about
the quality or authenticity of the items they purchase, requests for reimbursement of amounts paid, and communications threatening or commencing legal
actions against us or our users which may negatively impact our 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.
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