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!

Re:How productive.

[reezle]

I guess you didn't read the article.

It says Paypal to "Fine Gambling, Porn Sites"

So if you want the good stuff, you need to use paypal...

How?

[Nos.]

What right does paypal have to fine people. If its against the terms of service they could shut down the offending account, but fine them?

Re:How?

[rice_web]

The money is technically in PayPal's name, so I assume that they are free to do with it what they please, as defined in the contracts that you "sign" by clicking the submit button.

Re:How?

[Lehk228]

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

Re:How?

[hattig]

I agree, it seems totally illegal to me.

I think that they shouldn't be the ones to judge what is right and wrong morally. If it was illegal activity then locking the account might seem a reasonable measure once notified by someone with authority (as a normal bank would lock an account if a judge ordered it, etc). But otherwise they should not be doing this.

It's simply retarded. It looks like theft. Since when do companies have the right to fine their customers? They aren't a court of law.

And why a lot of people will never consider using Paypal at all. What next?

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).

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?

Re:Ebay does have Adult items

[tukkayoot]

Are Mastercard, Visa or American Express taken any less seriously because they can facciliate the purchase pornography? How about First Union bank?

I don't think so.

No, like the article/summary says, I think this has something to do with regulatory pressure. I really don't understand all the fuss, but I think it has something to do with the fact that PayPal isn't a bank, and thus has a different set of regulations/laws it has to abide by.

Offhand I don't see why PayPal should be restricted in this manner, and why they should feel compelled to levy these fines, but IANAL or anything.

Re:Ebay does have Adult items

[mcknation]

Well I did some *research* on this topic just now. ;)

Ebay hides all adult items in a catagory called "Mature Audiences". There is all kinds of stuff in this catagory. Sex toys. Elargement pills all kinds of stuff.

However not ONE single auction in this catagory allows paypal as a method of payment. My guess is that the forbid it entirely...even on ebay

/-McK

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.

I'm sure they are just being practical.

[FunkSoulBrother]

Being someone who does online sports betting, PayPal cut us out a little over 2 years ago.

But it was a practical, not moral cut in my opinion.

The fact of the matter is that in the gambling, adult and I suppose the drug business, you get way too many people who purchase the "product" and then get buyers remorse, and raise all kinds of hell at the card provider, saying it was never them but nefarious internet hooligans who gambled with their Paypal account, or bought that porn subscription to Fatchicks.com.

It became so bad at least in the gambling world that Paypal said the hell with it, and left. Now we have similar providers, but more personal responsibility, too. I actually like it that way.

This is terrible news!

[The I Shing]

Uh-oh, I'd better take those PayPal logos off of my website, www.nakedwomengamblingfordrugs.com.

E-Gold

[carcass]

PayPal's outdated. They're on a social engineering crusade.

Use e-gold instead.

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).

PayPal holds the money in a Trust

[Anonymous Coward]

Actually, even if they have legal title, you still have equitable title.
So, PayPal holds your money in a Trust.
So, normal Trust Law rules apply.

With the caviet that you told them what they could do with your money when you signed the "Terms of Service" contract.

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:Don't Hate Paypal

[Jah-Wren Ryel]

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

Ah, so they want the easy part of the business but not the hard part. I can understand that.

But in turn, I think we need to ask if Paypal is a monopoly. Just how much of all e-commerce passes through paypal? How much of the under $100 market? How much of the person-to-person market? I wouldn't be suprised if paypal had acheived monopoly status in at least one of those markets.

If they are a monopoly, having successfully squeezed out competition, only to begin with-holding sevices, they need a kick in the ass from the FTC because that's abusive.

By the way, it has already been pointed out once so far, and that post got a +5 rating, but the point really needs a +11 rating.

PAYPAL IS FINING THE CUSTOMERS TOO!!

So, if there ever was a time make sure that you had a dummy, empty bank account linked to your paypal account, now is it. All you need is for paypal to arbitrarily decide that you are the kind of customer that they don't want, and poof! there goes $500 from your bank account that you will probably never see again. Maybe even multiples of $500 depending on just how much customer abuse paypal thinks they can get away with since they are unregulated.

Re:E-Gold -- screw that

[hlygrail]

Anything that resizes my browser window automatically gets a /dev/IGNORE entry from me.

Man I hate that... not to mention the ads and pop-ups.

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.

Who cares? There are other services out there.

[ellisDtrails]

Use FIREPAY or NETTELLER (google them for info). They are RELIABLE and they aren't interested in being Big Brother or monitoring your online habits.

F Pay Pal.

Re:Who cares? There are other services out there.

[McDutchie]

Use FIREPAY

"FirePay is a Web-based cash account that can be used by anyone who has a U.S bank account." Woops, I'm in the Netherlands and I need to accept payments in euros. <sigh> Next...

or NETTELLER (google them for info).

Their site is so utterly content-free and/or badly designed I cannot even find a sign-up link or terms of service, so I have no way of knowing if they'd even accept me. But I doubt it since there's no reference to international accounts anywhere. Also it seems they cater to financial institutions and not mere mortals like me.

Seems PayPal is still the only choice I have. But if anyone has any other suggestions I'd appreciate them.

Probably an unenforceable penalty clause.

[Animats]

Private parties cannot assess fines. From a New York court decision:

• The rule is now well established. A contractual provision fixing damages in the event of breach will be sustained if the amount liquidated bears a reasonable proportion to the probable loss and the amount of actual loss is incapable or difficult of precise estimation. If, however, the amount fixed is plainly or grossly disproportionate to the probable loss, the provision calls for a penalty and will not be enforced. In interpreting a provision fixing damages, it is not material whether the parties themselves have chosen to call the provision one for "liquidated damages", as in this case, or have styled it as a penalty. (citations omitted.) Such an approach would put too much faith in form and too little in substance. Similarly, the agreement should be interpreted as of the date of its making and not as of the date of its breach.

  (Truck Rent-A-Center, Inc. v Puritan Farms 2nd, Inc., 41 NY2d 420, 425 [1977]; see Fingerlakes Chiropractic, P.C. v Maggio, 269 AD2d 790 [4th Dept. 2000]; Benderson v. Poss, 142 AD2d 937 [4th Dept. 1988]; Pyramid Centres & Co. v Kinney Shoe Corp., 244 AD2d 625 [3d Dept. 1997].)

It's up to a court to decide whether $500 is proportional to the actual loss incurred by PayPal. You usually don't get to count administrative time as costs in contract disputes; it has to be an outside expense.

Re:Pissing off your Enemies for $10.00

[LordK2002]

Your enemy will be fined $500.00 for just $10.00 and a few emails. Not a bad return on investment, eh?

And so will you, if you read the Acceptable Use Policy.

This is not an issue of fining just websites, it is an issue of fining users, as has been pointed out in other comments.

This is what makes it unacceptable and is why I have chosen to discontinue my use of PayPal.

K