eBay 2013 Annual Report Download - page 25

Use of our services for illegal purposes could harm our business.
We may be unable to prevent our users from selling unlawful or stolen goods or unlawful services, or selling goods or services in an
unlawful manner. As a result, we (including our employees and directors of our various entities) have been and may continue to be subject to
allegations of civil or criminal liability for unlawful activities carried out by users through our services. In a number of circumstances, third
parties, including government regulators and law enforcement officials, have alleged that our services aid and abet certain violations of certain
laws, including anti-scalping laws with respect to the resale of tickets, laws regarding the sale of counterfeit items, laws restricting or prohibiting
the transferability (and by extension, the resale) of digital goods (e.g., event tickets, books, music and software), the fencing of stolen goods,
selective distribution channel laws, customs laws, distance selling laws and the sale of items outside of the U.S. that are regulated by U.S. export
controls. For example:
As we seek to reduce bad buying experiences and improve the customer experience on our sites, our level of interaction with buyers and
sellers may increase over time, which could in turn increase our potential exposure to allegations of civil or criminal liability for unlawful
activities carried out by users through our services.
Although we have prohibited the listing of illegal and stolen goods and certain high-
risk items and implemented other protective measures,
we may be required to spend substantial resources to take additional protective measures or discontinue certain service offerings. In addition we
may incur costs as a result of potential liability relating to the alleged or actual sale of unlawful goods or the unlawful sale of goods. Certain
manufacturers and large retailers have sought new U.S. federal and state legislation regarding stolen goods that could limit our ability to allow
sellers to use our sites without confirming the source of, and their legal rights to sell, the underlying goods. In addition, from time to time we
have received significant media attention relating to the listing or sale of illegal goods and stolen goods using our services. This negative
publicity could damage our reputation, diminish the value of our brand names and make users reluctant to use our products and services.
PayPal's payment system is also susceptible to potentially illegal or improper uses, including illegal online gambling, fraudulent sales of
goods or services, illicit sales of prescription medications or controlled substances, piracy of software, movies, music and other copyrighted or
trademarked goods, money laundering, terrorist financing, bank fraud, child pornography trafficking, prohibited sales of alcoholic beverages or
tobacco products, online securities fraud and encouraging, promoting, facilitating or instructing others to engage in illegal activities. There has
been an increased focus by rights owners and U.S. government officials on the role that payments systems play in the sale of, and payment for,
pirated digital goods on the Internet, primarily through file sharing services. Recent changes in law have increased the penalties for
intermediaries providing payment services for certain illegal activities and additional payments-related proposals are under active consideration
by government policymakers. Despite measures PayPal has taken to detect and lessen the risk of this kind of conduct, illegal activities could still
be funded using PayPal.
Any resulting claims could damage our reputation and any resulting liabilities, loss of transaction volume or increased costs could harm
our business and our financial results.
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• In Turkey, local prosecutors and courts are investigating our liability for allegedly illegal actions by users of our Turkish
Marketplaces business (GittiGidiyor). In accordance with local law and custom, they are considering indicting, and have in some
cases already indicted, one or more members of the board of directors of our local Turkish subsidiary. We intend to defend
vigorously against any such actions.
• In August 2012, we were informed that U.S. listings of footwear with religious imagery were visible on our local Indian site and
we immediately removed these listings. In September 2012, a criminal case was registered against us in India in regard to these
listings, and we are challenging the prosecution of this case.
• The German Federal Supreme Court has ruled that we may have a duty to take reasonable measures to prevent prohibited DVDs
from being sold on our site to minors and that competitors may be able to enforce this duty.