Vistaprint 2009 Annual Report Download - page 41

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and have not obtained proper approval from consumers before debiting the consumers’ bank account
or billing the consumers’ credit card. From time to time we receive complaints from our customers
regarding certain of the membership discount programs offered on our websites.
Between July 29, 2008, and September 11, 2008, a total of seven purported class action lawsuits
were filed against VistaPrint USA, Inc., VistaPrint Corp. and/or Vistaprint Limited., and two third party
merchants, in U.S. Federal District Court in six different states, asserting substantially identical claims
alleging that the defendants violated certain Federal and state consumer protection laws in connection
with the offer of membership discount programs on our Vistaprint.com website. The plaintiffs allege,
among other things, that after ordering products on our Vistaprint.com website they were enrolled in
certain membership discount programs and that monthly subscription fees for the programs were
subsequently charged directly to their credit or debit cards, in each case purportedly without their
knowledge or authorization. The plaintiffs are seeking recovery of an unspecified amount of damages,
including statutory and punitive damages, together with interest and legal costs, and are also seeking
to prevent us and the merchants from engaging in similar practices in the future. The seven purported
class action lawsuits have been transferred to the United States District Court for the Southern District
of Texas for coordinated pretrial proceedings. On April 17, 2009, VistaPrint USA, Incorporated filed a
Motion to Dismiss the Consolidated Complaint, and on July 2, 2009 the Plaintiffs filed an Opposition to
VistaPrint USA, Incorporated’s Motion to Dismiss. Following that, on July 24, 2009, VistaPrint USA,
Incorporated filed a reply brief in support of its Motion to Dismiss.
We and the third party merchants may receive other complaints in the future regarding these
types of membership discount programs. Governmental authorities also may institute proceedings
alleging similar alleged misconduct. For example, on May 28, 2009, Senator John D. Rockefeller IV,
Chairman of the United States Senate Committee on Commerce, Science and Transportation
announced that his Committee is investigating membership discount programs marketed by Vertrue,
Inc. and Webloyalty.com, Inc. through e-commerce retailers due to the high volume of consumer
complaints concerning the programs. The purported class action lawsuits or any other private or
governmental claims or actions that may be brought against us in the future relating to these third party
membership programs 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. Even if we are successful in defending against these claims, such a defense may result
in distraction of management and significant costs. In addition, customer dissatisfaction or a significant
reduction in or termination of the membership discount offers on our website as a result of these claims
could have a negative impact on our brand, revenues and profitability.
We expect that revenues we derive from third party referral programs, particularly membership
discount programs, will decrease in the future, which could adversely affect our results of
operations.
For the fiscal year ended June 30, 2009 we derived approximately 5.0% of our total revenues
from referral fees generated from all sources, as compared to 6.9% in 2008. In each of those fiscal
years, 3.9% and 6.2%, respectively, of total Vistaprint revenue was derived from membership discount
programs. We expect that referral fee revenue from all sources will account for between 2% and 5% of
our total revenues by the end of calendar year 2010. Of that amount, we expect that referral fee
revenue from membership discount programs will decline in absolute dollar terms over that period of
time, including possibly to as low as zero. Actual referral fees, including membership discount
programs, could generate more or less of our total revenues than we currently expect due to a variety
of factors, including, among others, strategic operating decisions. We expect to partially offset the
anticipated reductions in referral fee revenues from a variety of sources, but if we are not successful in
doing so our revenues and profitability could be adversely affected.
Form 10-K
35