This excerpt taken from the BDAY 10-K filed Aug 28, 2006.
Our failure to address risks associated with credit card fraud could damage our reputation and brands.
Under current credit card practices, we are liable for fraudulent credit card transactions because we do not obtain a cardholders signature. We do not currently carry insurance against this risk. To date, we have experienced
minimal losses from credit card fraud, but we face the risk of significant losses from this type of fraud as our net sales increase. Such losses could impair our results of operations. In addition, any failure to adequately control fraudulent credit card transactions could damage our reputation and brands, and reduce our sales.