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."

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?

[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:I don't get it...

[pigscanfly.ca]

The biggest reason: FRAUD
Internet fraud rates are high, paypal factors that in to there fees charged ,but internet porn charge back rates are even higher.
Charge backs cost paypal money and PayPal has abviously done some calculations and determined it is more profitable for them to focus on the areas with lower charge back rates.
Do you understand now?

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.

E-Gold

[carcass]

PayPal's outdated.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

Use e-gold [egold.com] instead.

Financial

[Have Blue]

This might have an interesting effect on PayPal's financial classification (I recall arguments back when it became popular over whether or not it counted as a bank, mostly in terms of what regulations it had to obey). Are there any laws regarding this sort of discriminatory service fees by banks? Would doing this disqualify PayPal from any commercial status it was hoping to attain or maintain?

misleading title

[jdkane]

Title says: PayPal to Fine Gambling, Porn Sites

However PayPal is actually fining the PayPal user, not the sites.

Should read: PayPal to Fine Users for Gambling, Porn Sites

Re:How is this going to work for ebay?

[ari_j]

So here's what you do...find all the adult items on eBay that only take Paypal, win all of 'em, and refuse to pay.

Re:Finally!

[rice_web]

Private companies are subject to the consumer. If consumers turn away from PayPal because they see it as a "sinful" company, then PayPal will have to make changes. Perhaps PayPal has received a fair number of suggestions and/or seen a drop in sales recently that have been attributed to their adult-industry clients, and as a result they have decided to drop-kick those companies from the PayPal database.

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.

Online Poker will suffer

[currivan]

It's getting increasingly difficult to fund online poker accounts, which are enormously popular in light of the World Poker Tour and other televised events.

It looks like were seeing a new era of regulation through threat of regulation. The offshore drug sites are providing a valuable service too: AIDS activists lobbied to be allowed to import personal-use supplies of experimental drugs not yet approved domestically. They're also the main source of nootropics like Piracetam and Hydergine.

If you want, you can sue them for this.

[Anonymous Coward]

Step 1: Buy an eBay share (Unless you have some already). They own PayPal.

Step 2: Sue the company for abusing minority shareholder rights. I mean, in what way is it in the shareholder's interest for the company to pursue some kind of wonky moral agenda?

(They do have this concept for publically traded companines in the 'States right?)

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.

as a side note, doesn't this affect internet fraud

[trosenbl]

as a lot of people have pointed out, a reason paypal might want to do this is because of the extremely high rate of disputed charges with porn due to one member of the family ordering something, then claiming it was a fraudulent charge when their significant other finds out about it.

does anyone have any rough idea as to how often this is actually happening. isn't it possible that internet credit card fraud is much less of a problem than we've thought?

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.

Sexy Losers

[DarkDust]

PayPal's questionable policy has also hurted the artist of the excellent adult comic "Sexy Loser". PayPal has shut down his account although he doesn't sell any adult oriented material, he only asked for donations on his site.

PayPal currently is the MicroSoft of micropayment, it seems... which is very sad. Why they piss of their customers like this is beyond me. I can't understand how they could NOT like to make more money ?! Excluding adult material is surely a big financial loss, isn't it ?

Re:How is this going to work for ebay?

[Saeed al-Sahaf]

YEs, this is why. As a former IEG (look it up) [google.com] I can tell you that this is true. Guy get's BUSTED buying porn by significant other, says it was not him...

this is a good thing

[maxpublic]

Now that PayPal's intent to control not only your money but your morality is clear, their 'strategy' practically begs for a competitor to rise up against them - one who markets based on the fact that they WON'T tell you how you can and cannot spend your money.

Max

Re:What money?

[rpresser]

You are correct, in that business customers of Paypal do pay Paypal transaction fees for services.

However, I would expect that there would be arrangements for Paypal to deliver received funds from the Paypal "account" directly to bank accounts, if desired (and it would be desired). So money received wouldn't stay with Paypal very long; they're not a real bank, much as they want to be.

On the gripping hand, Paypal's new "fines" are just punishment fees for violation of their (admittedly volatile) terms of service. A provider of a service has the right to set fees charged for that service. So they're not doing anything with "your money"; they're charging you a fee for what you're doing with your money.

Re:How is this going to work for ebay?

[Anonymous Coward]

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.

Maybe, but I've read lots of article about fraud by these sites. Double charging and charnging after cancels. I would think that would be a bigger problem, but I doubt anyone can have good statistics on this.

Re:How?

[Anonymous Coward]

What's that term for when officials pressure somebody else to do something illegal for them?

Oh yeah.

Corruption.

Re:How?

[halowolf]

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

What's next is that a services hole will appear in the market and some enterprising person will create a service to fill it and thrive.

Meanwhile those reponsible for creating the hole will flounder and try to find ways to remain relevant while disenchanted customers go to their competitors. Soon website won't offer paypal payment options at all because no one wants to use them and they will go out of business...

And thus ends my flight of fancy....

The pr0n symbiosis

[rs79]

Lest people think that these days porn is half the net... it always was, and in a sense you could argue pr0n drove the development of the net like any good student of the human animal would assume it would.

Until 1995 the UUCP network had more nodes than the TCP/IP connected internet. What did the UUCP network carry? News and mail. That's it. That's all you could do with UUCP (modulo some half baked ftp by mail schemes). Before uu.net became the first commercial backbone, UUCP traffic was shuttled site to site by "some guy you knew" who gave you a feed, and at either 1200 or 2400 baud (no, I'm not kidding) but when uu.net came out you could BUY a DECENT feed and by Dod use Telebit Trailblazer modems at 19.2K. But who would pay $400 a month to get usenet?

Engineering managers addicted to porn, that's who. "We need it for technical reasons. We cannot do our work without it" always worked. As long as we found them porn, they'd pay for talk.bizarre.

Having created alt.sex by mistake one day I really think uunet's Rick Adams, uunet's founder, should have given me some sort of profit sharing.

Oh well, that's how you can tell internet pioneers, they're the ones with the arrows in their feet.

Re:How?

[rs79]

Paypal is YOUR money.

That you use THEIR service to send to somebody you want to pay. Don't like it? Don't use it.

You're bound by their terms, which can change any time. Don't like it? Don't use it.

It's absolutley not illegal to do what they're doing. Fucking stupid and cheesy, but not illegal.