Vistaprint 2009 Annual Report Download - page 40

contracts and other communications, consumer protection, the provision of online payment services,
broadband residential Internet access and the characteristics and quality of products and services. It is
not clear how existing laws governing issues such as property ownership, sales and other taxes, libel
and personal privacy apply to the Internet and e-commerce as the vast majority of applicable laws
were adopted prior to the advent of the Internet and do not contemplate or address the unique issues
raised by the Internet or e-commerce. Those laws that do reference the Internet, such as the Bermuda
Electronic Transactions Act 1999, the U.S. Digital Millennium Copyright Act and the U.S. CAN-SPAM
Act of 2003, are only beginning to be interpreted by the courts and their applicability and reach are
therefore uncertain. Those current and future laws and regulations or unfavorable resolution of these
issues may substantially harm our business and results of operations.
If we were required to review the content that a customer incorporates into a product and
interdict the shipment of products that violate copyright protections or other laws, our costs
would significantly increase, which would harm our results of operations.
Because of our focus on automation and high volumes, our operations do not involve, for the vast
majority of our sales, any human-based review of content. Although our websites’ terms of use
specifically require customers to represent that they have the right and authority to reproduce a given
content and that the content is in full compliance with all relevant laws and regulations, we do not have
the ability to determine the accuracy of these representations on a case-by-case basis. There is a risk
that a customer may supply an image or other content that is the property of another party used
without permission, that infringes the copyright or trademark of another party, or that would be
considered to be defamatory, hateful, racist, scandalous, obscene, or otherwise offensive,
objectionable or illegal under the laws or court decisions of the jurisdiction where that customer lives or
one or more jurisdictions where Vistaprint operates. There is, therefore, a risk that customers may
intentionally or inadvertently order and receive products from us that are in violation of the rights of
another party or a law or regulation of a particular jurisdiction. If we should become legally obligated in
the future to perform manual screening and review for all orders destined for a jurisdiction, we will
encounter increased production costs or may cease accepting orders for shipment to that jurisdiction
which could substantially harm our business and results of operations. In addition, if we were held
liable for actions of our customers, we could be required to pay substantial penalties, fines or monetary
damages.
Purported Federal class action lawsuits have been filed asserting substantially identical claims
alleging that certain of our customers were, without their knowledge or consent, enrolled in and
billed for membership discount programs offered by third party merchants on our
Vistaprint.com website; and our reputation, revenues and results of operations could be
adversely affected if we or the third party merchants are unable to successfully resolve these
lawsuits or similar claims that may be brought in the future.
During each of the last three fiscal years, we generated a portion of our revenue from order
referral fees, revenue share and other fees paid to us by third party merchants for customer click-
throughs, distribution of third-party promotional materials, and referrals arising from products and
services of the third party merchants we offer to our customers on our website, which we collectively
refer to as referral fees. Some of these third party referral-based offers are for memberships in
discount programs or similar promotions made to customers who have purchased products from us, in
which we receive a payment from the third party merchants for every customer that accepts the
promotion. Certain of these third party membership discount programs have been the subject of
consumer complaints, litigation, and regulatory actions alleging that the enrollment and billing practices
involved in the programs violate various consumer protection laws or are otherwise deceptive. For
example, various state attorneys general have brought similar consumer fraud lawsuits against certain
of the third party merchants asserting that they have not adequately disclosed the terms of their offers
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