“Don’t let the fear of losing be greater than the excitement of winning.” – Robert Kiyosaki
PayPal, Visa/MasterCard, JPMorgan Chase, and Square have systematically stayed away from businesses or customers who are involved in the adult industry. What has changed in the industry?
Denied Or Closed Accounts
According to a federal appeals court, forcing MasterCard and Visa to stop their cooperation with businesses with speech-protected websites is a violation against the First Amendment rights.
As account holders state, the major payment processors put forward an unclear policy concerning risk assessment, obscenity, or adult-content prohibition. Moreover, activities connected with adult businesses are put alongside narcotic sales.
In 2014, Chase held a campaign, targeting adult-industry bank account termination. PayPal is considered as the most famous company in this regard. It has systematically denied service, seized accounts and frozen funds for those being related to online adult content, no matter educational or artistic.
According to PayPal’s Acceptable Use Policy, the company’s services aren’t for activities related to transactions involving items considered obscene or adult-oriented materials and services.
In March 2014, PayPal closed its integration with Patreon, a subscription-model crowdfunding platform. The reason was the adult or NSFW content on Patron’s site. The latter decided to remove PayPal as a payment option for the creators’ of the content.
Blaming Other Companies
PayPal blames credit card companies, WePay blames Visa and big banking, Square blames Chase’s Paymentech, and Patreon blames PayPal.
According to WePay, acquiring banks and credit card brands usually restrict any payment processing for activities that are unlawful, brand damaging or high risk.
In 2012, PayPal told book publishers All Romance Ebooks, Bookstrand and Excessica to remove online titles considered obscene by the company. As a result, the book publishers removed the required content from their catalogs. Visa and MasterCard showed no involvement in the decision made by PayPal.
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Rules And Policies
The Federal Deposit Insurance Corporation clarified its rules concerning “high risk.” First Amendment protections for websites were strengthened by a federal judge.
This is thanks to Operation Choke Point, a federal mess launched in 2013 by the US Financial Fraud Enforcement Task Force or FFETF.
In the FDIC’s new guidance document for banks, “reputational risk” is omitted. It’s high-risk categories specify fraudulent services or goods, and tactics – “aggressive telemarketing or enticing and misleading pop-up advertisements on Websites.”
FDIC defines “unlawful Internet gambling and the illegal sale of tobacco products on the Internet” as high-risk sectors. However, PayPal’s items considered obscene and adult-oriented materials or services are not labeled as high risk.