PayPal to Fine Gambling, Porn Sites

scubacuda writes "Yahoo! reports that PayPal is taking an aggressive stance against gambling, adult, and non-prescription drug sites: anyone caught using PayPal for these purposes will be charged $500. Eric Jackson, a former PayPal executive and author of the new book 'The PayPal Wars,' calls the new policy 'draconian' and says it is likely a two-fold strategy to discourage certain behavior while heading off regulators."

Comments

How productive.

[rincebrain]

Now, instead of only worrying that we'll get crappy porn, we have to worry about having our money stolen, and NOT getting crappy porn!

Ebay does have Adult items

[lecithin]

What is the difference? They(ebay) list adult items, why could you not pay for them via Pay Pal?

How is this going to work for ebay?

[sgant]

Paypal is owned by ebay right now...but how is this going to work if you buy your adult stuff ON ebay?

Ebay does have a whole adult section where you can buy movies, toys etc etc...so will this effect it?

Fined by the same company that your buying adult things from.

Sounds too me like a double standard in the works. I don't think Paypal is trying to discourage this behavior that it finds objectionable...because if it did, then ebay would remove the entire adult section from it's site also.

Just and observation

Re:How is this going to work for ebay?

[rekoil]

Actually, eBay items are the sole exception to Paypal's adult items policy. The policy was primarily aimed at porn sites who took subscription payments via paypal, rather than physical items such as adult movies, toys, etc.

This is due to the extremely high dispute rate for these types of payments, most often due to husbands claiming the charge is fraudulent when the wife discovers it. As you might expect, Paypal does not want to be in the middle of these disputes, and banning said usage is, in their opinion, the best way to avoid being put in that position

I'm curious if anyone's tried to sell memberships to a porn site on eBay, however...that could be an end run around the policy if eBay permits it.

Re:How?

[Lehk228]

Since when has paypal cared about whether their actions are legal or not?

What's Next?

[BalorTFL]

I really hope that this isn't the beginning of a new trend. How long until VISA won't let you buy beer or cigarettes and MasterCard charges a 50% tax on Penthouse? When payment methods start enforcing their own moralities on their costumers, something is seriously wrong.

Re:What's Next?

[mark-t]

This has nothing to do with enforcing certain moralities on you.

Paypal and credit card companies couldn't care less about your personal moral character. What they *DO* care about is making money, and certain classes of purchases have a much higher rate of fraudulent activity than others. Online purchases in general and especially online pornography in particular has an absolutely _huge_ level of fraudulent use compared to most other credit card activities. They are only trying to avoid the chargebacks that would follow such fraudulent uses as these radically cut into the amount of money they are going to make.

I can say one thing though... your CC company will not ever try to stop you from making a purchase in person, regardless of the nature of the item (barring credit limit issues, of course). According to a representative at VISA that I spoke to when I was talking to them about a merchant account, CC fraud incidence is lowest in transactions which expect a physical signature (and if you don't actually _check_ those signatures, you could end up losing your merchant account).

Feed your local e-diots.

[Anonymous Coward]

Any site that has advertising popups on the main page, has no titles on pages, and panders to people who will believe anything anyone says, as long as it's backed in allegedly real gold... well... (Hey, nobody ever said /. only had intelligent people.)

Don't Hate Paypal

[Anonymous Coward]

Almost every single reply so more is complaining that its none of Paypal's business to enforce their morals on the user. Anyone who has said something like that is a mindless slashdot troll who doesn't know anything about 3rd party processing or merchant accounts. Most merchant account providers have banned adult sites and gambling for years because they are High Risk Industries. Its not just adult and gambling, many processors also ban game servers, IRC-related sites, MLM schemes, make $3000-working-from-home-sites, etc. These types of websites are highly likely to attract stolen credit cards, credit card fraud, and chargebacks. It costs the merchant provider money every time a chargeback is done, and it takes both time and money to fight a chargeback. So please do a little research into the world of credit card processing before you go on a rant about PaPal's religious crusade. They are simply trying to decrease fraudulent transactions. If you don't agree with their policies or the $500 fine, you can opt to use a different company which does allow adult and gambling merchants, but beware you will probably have higher transaction fees, more thorough background checks, and possibly a several day ACH hold on any funds you receive.

Re:How?

[hattig]

Not to the tune of $500 though.

Remember credit cards are YOU borrowing money from someone else.

Paypal is YOUR money.

Most bank charges and fees (they are not called fines) occur when YOU start eating into THEIR money, by being overdrawn, etc. You don't get fined because some of your money in your account came from you doing something illegal or immoral (according to the bank).

Re:I don't get it...

[RealProgrammer]

My guess is there are three factors:

1. Paypal sees that porn, gambling, and viagra sales generate a lot of customer complaints. People tend to claim they didn't want the item, it wasn't them, somebody stole their identity, etc. Like any business, they're trying to limit their losses.

2. Those transactions are all very spammy. Add hot stock tips and Nigerian crown princes and you've pretty summarized my 'caughtspam' folder.

3. Paypal doesn't want to be in the liability loop for kiddie porn, illegal gambling, and illegal drug sales.
   

4. Paypal wants to keep a clean image, and genuinely don't want those transactions. I kind of doubt this was a factor, but there's always hope.