Table of Contents
LEGAL AND COMPLIANCE RISKS
Increasing and changing government regulation of our businesses may harm our operating results.
We are subject to federal, state, local and international laws and regulations that affect our and our customers' activities, including, without limitation, labor, advertising and
marketing, tax, financial services, data privacy and security, electronic funds transfer, money transmission, lending, digital content, consumer protection, real estate, billing, e-
commerce, promotions, quality of services, intellectual property ownership and infringement, import and export requirements, anti-bribery and anti-corruption, insurance, foreign
exchange controls and cash repatriation restrictions, anti-competition, environmental, health and safety, and other regulated activities. There have been significant new
regulations and heightened focus by the government on many of these areas. As we expand our products and services and evolve our business models, both domestically and
internationally, we may become subject to additional government regulation or increased regulatory scrutiny. For example, the regulation of emerging technologies that we may
incorporate into our offerings, such as artificial intelligence and blockchain, is still an evolving area, and it is possible that we could become subject to new regulations that
negatively impact our operations and results. Further, regulators (both in the U.S. and in other jurisdictions in which we operate) may adopt new laws or regulations, change
existing regulations, or their interpretation of existing laws or regulations may differ from ours. We are and may continue to be subject to pandemic-related protocols and
restrictions that impact our workforce and workplaces. Such restrictions have disrupted and may continue to disrupt our business operations and limit our ability to perform critical
functions.
The tax preparation industry continues to receive heightened attention from federal and state governments. New legislation, regulation, public policy considerations, changes in
the cybersecurity environment, litigation by the government or private entities, changes to or new interpretations of existing laws may result in greater oversight of the tax
preparation industry, restrict the types of products and services that we can offer or the prices we can charge, or otherwise cause us to change the way we operate our tax
businesses or offer our tax products and services. We may not be able to respond quickly to such regulatory, legislative and other developments, and these changes may in turn
increase our cost of doing business and limit our revenue opportunities. In addition, if our practices are not consistent with new interpretations of existing laws, we may become
subject to lawsuits, penalties, and other liabilities that did not previously apply. We are also required to comply with a variety of state revenue agency standards in order to
successfully operate our tax preparation and electronic filing services.
Changes in state-imposed requirements by one or more of the states, including the required use of specific technologies or technology standards, may significantly increase the
costs of providing those services to our customers and may prevent us from delivering a quality product to our customers in a timely manner.
Complex and evolving regulation of privacy and data protection could result in claims, changes to our business practices, penalties or increased cost of operations
or otherwise harm our business.
Regulations related to the provision of online services are continually evolving as federal, state and foreign governments adopt new or modify existing laws and regulations
addressing data privacy, cybersecurity, the collection, processing, storage, transfer and use of data, and the use of AI. These include, for example, the EU's General Data
Protection Regulation (GDPR), the California Consumer Protection Act (CCPA), the California Privacy Rights Act that amended the CCPA in January 2023 and the Virginia
Consumer Data Protection Act that became effective in January 2023. These laws and regulations may be inconsistent across jurisdictions and are subject to evolving and
differing (sometimes conflicting) interpretations. In our efforts to meet the various data privacy regulations that apply to us, we have made and continue to make certain
operational changes to our products and business practices. If we are unable to engineer products that meet these evolving requirements or help our customers meet their
obligations under these or other new data regulations, we might experience reduced demand for our offerings. Further, penalties for non-compliance with these laws may be
significant.
In addition, the evolution of global privacy treaties and frameworks has created compliance uncertainty and increased complexity. For example, the judicial invalidation of the EU-
U.S. and Swiss-U.S. Privacy Shield frameworks that we relied on to transfer data has created additional compliance challenges for the transfer of EU personal data to the U.S.
While we rely on alternative methods for the transfer of this data, ongoing legal challenges to these and other transfer mechanisms could cause us to incur costs or change our
business practices in a manner adverse to our business.
Other governmental authorities throughout the U.S. and around the world are considering similar types of legislative and regulatory proposals concerning data protection. Each of
these privacy, security and data protection laws and regulations could impose significant limitations, require changes to our business, require notification to customers or workers
of a security breach, restrict our use or storage of personal information, or cause changes in customer purchasing behavior that may make our business more costly, less
efficient or impossible to conduct, and may require us to modify our current or future products or services, which may make customers less likely to purchase our products and
may harm our future financial results. Additionally, any actual or alleged noncompliance with these laws and regulations could result in negative publicity and subject us to
investigations, claims or other remedies, including demands that we modify or cease existing business practices, and expose us to significant fines, penalties and other
damages. We have incurred, and may continue to incur, significant expenses to comply with existing privacy and security standards and protocols imposed by law, regulation,
industry standards or contractual obligations.
Intuit Q3 Fiscal 2023 Form 10-Q 55