Vistaprint 2011 Annual Report Download - page 32

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Form 10-K
as the vast majority of applicable laws were adopted before 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.
We face judicial and regulatory challenges to our practice of offering free products and
services, which, if successful, could hinder our ability to attract customers and generate
revenue.
We regularly offer free products and services as an inducement for customers to try our
products and services. 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 a free product offer — our customers, competitors,
governmental regulators and others in Europe, the United States and other countries have in the past
complained and filed claims with, and initiated inquiries by, governmental and standards bodies that
our free offers are misleading or do not comply with applicable legislation or regulation, and we may
receive similar complaints, claims and inquiries in the future. 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.
If we were required to review the content that our customers incorporate into our products
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 any
human-based review of content for the vast majority of our sales. 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 for a product order that we produce 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 objectionable or illegal under the laws of the jurisdiction(s) where that customer lives or
where we operate. 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.
The third party membership programs previously offered on our website may continue to draw
customer complaints, litigation and governmental inquiries, which can be costly and could
hurt our reputation.
We previously offered on our website third party membership discount programs, some of
which have been, and may continue to be, the subject of consumer complaints, litigation, and
governmental regulatory actions alleging that the enrollment and billing practices involved in the
programs violate various consumer protection laws or are otherwise deceptive. Although we removed
all such membership discount program offerings from our websites as of November 2009 and
terminated our relationship with the third party merchant responsible for these programs, we continue
to receive complaints from our customers and inquiries by state attorneys general and government
agencies regarding these programs. Any private or governmental claims or actions that may be
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