Stamps.com 2015 Annual Report Download - page 21

TABLE OF CONTENTS
Increases in payment processing fees would increase our operating expenses and adversely affect our results of operations.
Ourcustomerspayforourservicespredominatelyusingcreditcardsanddebitcardsand,toalesserextent,byuseofautomated
clearinghousepayments.Ouracceptanceofthesepaymentmethodsrequiresourpaymentofcertainfees.Fromtimetotime,thesefees
mayincrease,eitherasaresultofratechangesbythepaymentprocessingcompaniesorasaresultofachangeinourbusinesspractices
thatincreasethefeesonacost-per-transactionbasis.Ifthesefeesforacceptingpaymentmethodsincreaseinfutureperiods,itwould
adverselyaffectourresultsofoperations.
A decline in our ability to effectively bill our customers by credit card and debit card would adversely affect our results of
operations.
Ourabilitytoeffectivelychargeourcustomersthroughcreditcardsanddebitcardsissubjecttomanyvariables,includingour
ownbillingtechnologyandpractices,thepracticesandrulesofpaymentprocessingcompanies,andthepracticesandrulesofissuing
financialinstitutions.Ifwedonoteffectivelychargeandbillourcustomersinfutureperiodsthroughcreditcardsanddebitcards,it
wouldadverselyaffectourresultsofoperations.
Credit card fraud and our response to it could adversely affect our business.
Weroutinelyreceiveordersplacedwithfraudulentcreditcarddata.Wedonotcarryinsuranceagainsttheriskofcreditcardfraud,
soourfailuretoadequatelycontrolfraudulentcreditcardtransactionscouldreduceournetrevenuesandourprofit.Wemaysuffer
lossesasaresultofpostagepurchasesplacedwithfraudulentcreditcarddataeveniftheassociatedfinancialinstitutionapproved
payment.Ifweareunabletodetectorcontrolcreditcardfraud,ourliabilityforthesetransactionscouldharmourbusiness,prospects,
financialconditionandresultsofoperation.Further,totheextentoureffortstopreventfraudulenttransactionsresultinourinadvertent
refusaltofilllegitimatebusinessrequests,wewouldlosethebenefitoflegitimatepotentialsalesandriskthealienationoflegitimate
customers.
Default on the credit we may provide for printing postage to one or more of our larger customers could adversely impact our
results of operations.
Asweacquirelargercustomersthatrequirelargerpostagevolumestosupporttheirbusinesses,weofferinvoicingandextend
credittermstocertainofthesecustomerstofacilitatetheiraccesstopostageanduseofourservices.Ifoneormoreofthesecustomers
weretodefaultonamountsowed,itcouldadverselyaffectourresultsofoperations.
Third party assertions of violations of their intellectual property rights could adversely affect our business.
Substantiallitigationregardingintellectualpropertyrightsexistsinourindustry.Thirdpartiesmaycurrentlyhave,ormay
eventuallybeissued,patentsuponwhichourproductsortechnologyinfringe.Anyofthesethirdpartiesmightmakeaclaimof
infringementagainstus.Wemaybecomeawareof,orwemayincreasinglyreceivecorrespondenceclaiming,potentialinfringementof
otherparties’intellectualpropertyrights.Wecouldincursignificantcostsanddiversionofmanagementtimeandresourcestodefend
claimsagainstus,regardlessoftheirvalidity.Anyassociatedcosts(includingsettlementscost,judgmentsandlegalexpenses)and
businessdistractionscouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Inaddition,
litigationinwhichweareaccusedofinfringementmightcauseproductdevelopmentdelays,requireustodevelopnon-infringing
technologyorrequireustoenterintoroyaltyorlicenseagreements,whichmightnotbeavailableonacceptableterms,oratall.Ifa
successfulclaimofinfringementweremadeagainstusandwecouldnotdevelopnon-infringingtechnologyorlicensetheinfringedor
similartechnologyonatimelyandcost-effectivebasis,ourbusinesscouldbesignificantlyharmedorfail.Anylossresultingfrom
intellectualpropertylitigationcouldseverelylimitouroperations,causeustopaylicensefees,orpreventusfromdoingbusiness.
Pending or future litigation could have a material adverse effect on our financial position or results of operations.
Forinformationconcerningmateriallitigationinwhichweareinvolved,pleaseseethe“LegalProceedings”noteintheNotesto
ConsolidatedFinancialStatementscontainedelsewhereinthisReport.Litigationisuncertain,andtheoutcomeofindividualcasesis
oftennotpredictablewithanydegreeofcertainty.
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