How Paypal is becoming the 'Moral Police' for the Internet

[Yankee (BitInstant)]

Sparked from the termination of Paypal on Cyberlocker, one of the largest file sharing websites (re: https://bitcointalk.org/index.php?topic=66378.0)
I noticed they aren't the only ones here.

The article (http://torrentfreak.com/cyberlocker-to-shut-down-after-paypal-ban-120226/) comments that:

“PayPal just informed us that our PayPal account is closed due to the high risks of processing file sharing payments,” RapidGator announced. According to the site’s operators this may very well be the end of the file-sharing industry.

PayPal has frozen the cyberlocker’s funds for 6 months and new users can no longer make payments through PayPal. The ban probably means that “affiliates” can’t be paid through PayPal either.

While Paypal is notoriously known for Bitcoin related accounts, regardless of your business plan (even having the word bitcoin on your website) I think Paypal acting as the 'Moral Police' goes higher then just Bitcoin.

TechCrunch outlined it in an article this morning:

"PayPal As Moral Police? Forces E-Book Sellers To Remove Certain Erotica Content"

Smashwords, an e-book distributor that competes with Amazon, has sent out a letter to the authors, publishers and literary agents that it works with to tell them that PayPal is requiring Smashwords to remove all erotica content on its platform that contains references to bestiality, rape and incest – otherwise it will stop doing business with Smashwords altogether. The changes are due to take effect on Tuesday, Feb. 

Regardless of your opinion on incest, it’s a slippery slope when we allow others to control what we think and write. Fiction is fantasy.

Paypal is cracking down hard: which can only mean one thing, fear. They know their business model is at risk here.

[Herodes]

Paypal, while appearing to be big now, it's not certain it will always remain like this. When you have a large amount of customers, treating them like garbage may seem like no big deal, but the customer base may decline, and one day they won't longer be able to keep going with their current business model, and they're out for good.

Seems to be down right now, but otherwise http://www.paypalsucks.com/ is a good site to visit.

[ArticMine]

PayPal has to deal with regulations in over 190 different countries and who knows how many different state, provincial and local regulatory bodies around the world. It is actually very surprising how much one can do with PayPal given the worldwide regulatory exposure they have.

[Yankee (BitInstant)]

PayPal has to deal with regulations in over 190 different countries and who knows how many different state, provincial and local regulatory bodies around the world. It is actually very surprising how much one can do with PayPal given the worldwide regulatory exposure they have.

Your 100% correct, and Herodes's response can be a comment to that

Paypal, while appearing to be big now, it's not certain it will always remain like this. When you have a large amount of customers, treating them like garbage may seem like no big deal, but the customer base may decline, and one day they won't longer be able to keep going with their current business model, and they're out for good.

Seems to be down right now, but otherwise http://www.paypalsucks.com/ is a good site to visit.

The key is, Paypal has to find the balance between handling regulation and spilling the issues and loss onto their good customers who want to be compliant.

If they don't adapt to the worldwide situation, they will drastically lose their market share

[stevegee58]

Buried in the fine print of PayPal's Acceptable Use Policy are all kinds of moralistic restrictions.  Some examples:

1) No porn
2) No gambling (lotteries, online poker etc)
3) No weapons
4) No firearms, ammunition or firearm parts
5) No items "considered obscene" (whatever that means - up to them I guess)

I absolutely detest PayPal telling me what I can do with my money but unfortunately there aren't any real (i.e. widely accepted) alternatives.  I've run into the part regarding firearm parts.  They'll freeze your account without warning; good luck getting your money out after that.

[ArticMine]

Buried in the fine print of PayPal's Acceptable Use Policy are all kinds of moralistic restrictions.  Some examples:

1) No porn
2) No gambling (lotteries, online poker etc)
3) No weapons
4) No firearms, ammunition or firearm parts
5) No items "considered obscene" (whatever that means - up to them I guess)

I absolutely detest PayPal telling me what I can do with my money but unfortunately there aren't any real (i.e. widely accepted) alternatives.  I've run into the part regarding firearm parts.  They'll freeze your account without warning; good luck getting your money out after that.

They have no choice in order to stay in business across so many different regulatory regimes.

[ZoladkowaGorzka]

That's why we all need to get away from PP as far as possible..

Buried in the fine print of PayPal's Acceptable Use Policy are all kinds of moralistic restrictions.  Some examples:

1) No porn
2) No gambling (lotteries, online poker etc)
3) No weapons
4) No firearms, ammunition or firearm parts
5) No items "considered obscene" (whatever that means - up to them I guess)

I absolutely detest PayPal telling me what I can do with my money but unfortunately there aren't any real (i.e. widely accepted) alternatives.  I've run into the part regarding firearm parts.  They'll freeze your account without warning; good luck getting your money out after that.

They have no choice in order to stay in business across so many different regulatory regimes.

Or maybe they just should stand against some law regimes.
f.e move its seets to Dubai etc.

[stevegee58]

This is sad.  The thing is that all their restrictions don't matter; they're really just inconveniences to me.

If I want to buy things off the grid I use USPS Money Orders and send them via snail mail.

[Herodes]

I'm no lawyer, but freezing an account for 6 months without the client having access to his funds, I frankly do not understand how that can be legal in any jurisdiction. I haven't counted all the lawsuits, but apparently from what I've heard, PayPal have lost quite a lot of those.

Also, it depends what kind of 'connections' you have within PayPal, if you're just an ordinary average Joe with no special connections, I'm afraid they can do basically whatever they want to your account.

For some small companies, having their PayPal account frozen could actually means they're going out of business. Here's an interesting read:

http://indie-games-ichiban.wonderhowto.com/blog/paypal-problems-strike-yet-another-indie-developer-0130483/

It appears to me that any game developer that wants to fund his game with donations, should use bitcoin, as it would be an excellent way to transfer funds over the internet, with no threat of anyone freezing your funds. Obviously many people don't know bitcoin, but if game developers started to mention bitcoin and asking for bitcoin funding, then more people would learn about bitcoins and get bitcoins.

In my personal opinion, any freezing of an account should be sorted out as quickly as possible, and certainly not be allowed to go on for 180 days. I can't imagine how apeshit pissed I would've been if that ever happened to me. So just to make sure, I don't use PayPal.

[zer0]

Paypal has had those rules ever since Meg Whitman wacky republican nutjob bought them out. There are entire countries banned from using PayPal, as a global payment processor they have no future. Problem is bitcoin is too unstable for merchants to use still or else all of India and Pakistan would start using it..they go to creative lengths to get a paypal account just to punt some junk online like the rest of us.

I would never trust any US based payment processor. Once dwolla grows they will start clamping down with same restrictions to appease corporate licensing and anti piracy groups, moral minority crusaders, senator's looking for scapegoats ..ect

[stevegee58]

paypal is ebay.

so, until a challenger appears in the online auction market -

they can do what they want.

I've used PayPal quite a bit but amazingly never bought or sold anything on eBay.

[ArticMine]

Paypal has had those rules ever since Meg Whitman wacky republican nutjob bought them out. There are entire countries banned from using PayPal, as a global payment processor they have no future. Problem is bitcoin is too unstable for merchants to use still or else all of India and Pakistan would start using it..they go to creative lengths to get a paypal account just to punt some junk online like the rest of us.

I would never trust any US based payment processor

People in India can use PayPal https://www.paypal.com/worldwide/ however a lot of the restrictions have to do with Indian laws and regulations.

India

As of March 2011(Date needs to be changed), PayPal made changes to the User Agreement for Indian users to comply with Reserve Bank of India regulations. Notable changes to the agreement were:

    Export related payments for goods and services may not exceed $500.
    Any balance or future payments must not be used to buy goods or services but transferred to a bank account within 7 days from the receipt of payment.
    Credit/Debit cards must be used to pay through Paypal.[citation needed]

The per transaction limit just been changed to USD 3000, since 14 October 2011

from http://en.wikipedia.org/wiki/PayPal

Multiply this by 190 countries worldwide and one soon sees the problem that PayPal or a potential competitor say Google or Facebook faces. Bitcoin does not have this problem at all

[Yankee (BitInstant)]

I'm no lawyer, but freezing an account for 6 months without the client having access to his funds, I frankly do not understand how that can be legal in any jurisdiction. I haven't counted all the lawsuits, but apparently from what I've heard, PayPal have lost quite a lot of those.

In my personal opinion, any freezing of an account should be sorted out as quickly as possible, and certainly not be allowed to go on for 180 days. I can't imagine how apeshit pissed I would've been if that ever happened to me. So just to make sure, I don't use PayPal.

We're currently in a legal battle about this, lawyers and all. Trust me, its not as easy as it sounds.

[zer0]

Paypal is also notorious for outright denying Indian applications even if completely legitimate. Check all the hosting forums like digital point for their epic paypal pain stories of seizing funds, denying ID scans, dropping accounts, ect.

[ArticMine]

Paypal is also notorious for outright denying Indian applications even if completely legitimate. Check all the hosting forums like digital point for their epic paypal pain stories of seizing funds, denying ID scans, dropping accounts, ect.

But before blaming PayPal has anyone asked the question why? In particular how different laws and regulations impact a company like PayPal. Lets take the US and the UK for example. To do business in the US one has to ban gambling. In the UK one has to ban guns. Now to do business in both the US and UK one has to ban both gambling and guns. The more places one wants to do business the more things one has to ban and restrict.

[FreeMoney]

“You might wonder if Smashwords should simply switch to a different payment provider.  It’s not so easy.  PayPal is designed into the wiring of the Smashwords platform.  They run the credit card processing for our retail store, and they’re how we pay our authors and publishers.  PayPal is also an extremely popular, trusted payment option for our customers.  It is not feasible for us to simply switch to another provider, should such a suitable provider even exist, especially with so few days notice.”

This is why you don't marry an evil bitch.

[kiba]

“You might wonder if Smashwords should simply switch to a different payment provider.  It’s not so easy.  PayPal is designed into the wiring of the Smashwords platform.  They run the credit card processing for our retail store, and they’re how we pay our authors and publishers.  PayPal is also an extremely popular, trusted payment option for our customers.  It is not feasible for us to simply switch to another provider, should such a suitable provider even exist, especially with so few days notice.”

This is why you don't marry an evil bitch.

Every evil bitch story about paypal makes Bitcoin and alternative payment platform stronger and stronger...until we reach critical mass of anger. Then it's too late.

[ArticMine]

“You might wonder if Smashwords should simply switch to a different payment provider.  It’s not so easy.  PayPal is designed into the wiring of the Smashwords platform.  They run the credit card processing for our retail store, and they’re how we pay our authors and publishers.  PayPal is also an extremely popular, trusted payment option for our customers.  It is not feasible for us to simply switch to another provider, should such a suitable provider even exist, especially with so few days notice.”

This is why you don't marry an evil bitch.

I am not going to suggest divorcing the "evil bitch" but an affair on the side with the Bitcoin bitch can make a lot of sense here.

[kiba]

I am not going to suggest divorcing the "evil bitch" but an affair on the side with the Bitcoin bitch can make a lot of sense here.

Their audience is going to need to be familiar with bitcoin in order for it to work really well. Yeah, it's a chicken and egg problem.

[ArticMine]

I am not going to suggest divorcing the "evil bitch" but an affair on the side with the Bitcoin bitch can make a lot of sense here.

Their audience is going to need to be familiar with bitcoin in order for it to work really well. Yeah, it's a chicken and egg problem.

It is more like they will get an additional audience consisting of:
1) Bitcoin users very small and yes this is where the chicken and egg problem applies
2) PayPal haters. There is a lot more to these than (1) and if they hate PayPal enough they will go out of their way to learn about Bitcoin.
3) Those who do not have a Credit Card and / or cannot get a PayPal account even much greater than (1) and (2) combined and again they will go out of their way to learn about Bitcoin.