Vistaprint 2006 Annual Report Download - page 33

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Table of Contents
We derive a portion of our revenues from offers made to customers by third parties who have had their business practices challenged
in the past, and if the business practices of these third parties are challenged in the future, we would lose revenue and our reputation
would be adversely affected.
For the fiscal year ended June 30, 2006, we derived less than 10% of our revenues from order referral fees paid to us by merchants for
customer click−throughs and orders. In general, these third parties offer memberships in discount programs or similar promotions to customers
who have purchased products from us and we receive a payment from the third party for every customer that accepts the promotion. Certain of
these third parties have been the subject of consumer complaints and litigation alleging that their enrollment and billing practices violate various
consumer protection laws or are otherwise deceptive. For example, various state attorney generals have brought consumer fraud lawsuits against
certain of these parties asserting that the parties have not adequately disclosed the terms of their offers and have not obtained proper approval
from consumers before billing the consumers’ bank account or credit card. Some consumers have brought individual or class action complaints
alleging similar misconduct. We have from time to time received complaints from customers regarding these programs. Claims or actions that may
be brought against us in the future related to these relationships could result in our being obligated to pay substantial damages or incurring
substantial legal fees in defending claims. These damages and fees could be disproportionate to the revenues we generate through these
relationships, which would have an adverse affect on our results of operations. In addition, through these relationships, we now offer promotions
and memberships that are branded as VistaPrint promotions and memberships which could result in an increased likelihood of our becoming
involved in litigation or claims brought against these third parties. Even if we were successful in defending against these claims, such a defense
may result in distraction of management. In addition, customer dissatisfaction or a termination of these relationships could have a negative impact
on our brand, revenues and profitability.
Our practice of offering free products and services could be subject to additional judicial or regulatory challenge which, if successful,
would hinder our ability to attract customers and generate revenue.
We regularly offer free products as an inducement for customers to try our products. Although we believe that we conspicuously and clearly
communicate all details and conditions of these offers—for example, that customers are required to pay shipping and processing charges to take
advantage of the free product offer—we have in the past, and may in the future, be subject to claims from individuals or governmental regulators
that our free offers are misleading or do not comply with applicable legislation. For example, one of our subsidiaries and our predecessor
corporation were named as defendants in a class action lawsuit alleging that the shipping and handling fees we charged in connection with our
free business card offer violates sections of the California Business and Professions Code that limit the amount that may be charged for shipping
and handling in connection with a prize or gift. In addition, customers have filed complaints with governmental and standards bodies claiming that
they were misled by the terms of our free offers. Our free product offers could be subject to challenge in other jurisdictions in the future. If we are
subject to further actions in the future, or if we are compelled or determine to curtail or eliminate our use of free offers as the result of any such
actions, our business prospects and results of operations could be materially harmed.
Our failure to protect confidential information of our customers and our network against security breaches and to address risks
associated with credit card fraud could damage our reputation and brand and substantially harm our business and results of
operations.
A significant prerequisite to online commerce and communications is the secure transmission of confidential information over public
networks. Our failure to prevent security breaches could damage our reputation and brand and substantially harm our business and results of
operations. Currently, a
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