PayPal sets down stricter regulations for file-sharing sites

Payment firm seems to be washing its hands of potentially sketchy sites.

Read the whole story

 

[Jokotai]

Not surprisingly, locker sites are already grumbling about the changes. Others, like the Palo Alto-based MediaFire, say that there has been little impact their bottom line since the switchover. Neither MediaFire nor PayPal immediately responded to requests for comment.

Wait, is this basically stating that PayPal wants free and clear access to their merchants' entire server and customer database? It seems really odd for a company who has a very clear indemnity policy, especially since I don't see the precedence for potentially suing PayPal for being the host of a transaction which leads to illegal activity.

 

[saturnblackhole]

This is why e-currency such as bitcoin is important. To give a credit card company or a online payment company like paypal control over web-purchases gives them the power to control the internet. For now they're using this power to discourage fringe illegal websites (except for wikileaks) but what stops them from expanding to other sites......

 

[reflex-croft]

This is why e-currency such as bitcoin is important. To give a credit card company or a online payment company like paypal control over web-purchases gives them the power to control the internet. For now they're using this power to discourage fringe illegal websites (except for wikileaks) but what stops them from expanding to other sites......

OMG SLIPPERY SLOPE!!!!

 

[Telekenesis]

Paypal are govt lackeys as they will do anything they say as they don't want to be regulated like a bank. They'll brownose anyone they can to keep it that way. They ban political donations as displayed and they also have recently banned and seized the accounts of anyone selling a perfectly legal tea/supplement becuase someone in the FDA asked them too. Complete and total brownosing lackeys and the govt has the carrot on the stick of regulation dangling around to make sure they get them to do whatever they want. It's essentially a form of regulation and censorship without having to get laws passed or a democratic process to happen.

Paypal sent back my donation to cryptome and anonews.

 

[bkaral]

My experience has been that Paypal is far from developing a conscience or ethics yet. Maybe some day.

 

[rmcrowley2000]

What incentive does Paypal have to actually enforce this? If anyone is complaining, it should be Ebay's shareholders, as this looks like a clear agency problem. Investors want to maximize profit, while it appears management has some personal/political/moral issue with locker sites and is spending extra cash to monitor them while simultaneously reducing revenue...

 

[nibb]

I don´t condemn piracy at all, but this type of measures from payment companies is what brought people to invent things like Bitcoins.

Companies that handle money and transactions have just to much power over what a company, website or person can and can´t do. Their job is to process payments, nothing more. I don´t think they should taking positions into what is legal or what is moral. It started with WikiLeaks and now with file sharing files but nothing gives you a guarantee they will not get more and more strict with that they consider a policy violation.

There are people that where kicked from PayPal without reason because they can. They have the right to deserve anyone their services. And this is the reason why its dangerous to put online internet ecommerce on the hangs of 2 or 3 companies.

Just look it like this. Both PayPal and Credit cards do not accept websites and transactions involved with Bitcoin? Why? Because they want. Simple. They feel its a threat to their business model and so they deny anyone to use their services for anything related to BitCoins. Bitcoins where not declared illegal and any country in the world but major financial companies like PayPal, Visa and Mastercard ban accounts and people from using their services with anything related to this subject. Its not illegal but its very immoral as they basically scream people in the face "We do not want competition"

This is dangerous. They want to be become the online leaders of online transactions which they are. Otherwise they should explain why they do not accept any bitcoin related transactions. Is it fraud? Lies, they know the identify of each and everyone using their services. The reason is they want to make it has hard as possible to convert bitcoins to money. PayPal in particular is more and more taking a moral police role. You can hear horror stories about this, they deny political donations and allot of completely legal products just because they don´t want to cross a grey line. And they are digging their own grave doing this, because more and more people jump into alternatives like BitCoins.

 

[TomTheAlmostUgly]

Isn't this tortious[sp] interference? Sue them. That, or draw a picture of Paypal's mother doing something lewd.

 

[bames53]

This is why e-currency such as bitcoin is important. To give a credit card company or a online payment company like paypal control over web-purchases gives them the power to control the internet. For now they're using this power to discourage fringe illegal websites (except for wikileaks) but what stops them from expanding to other sites......

OMG SLIPPERY SLOPE!!!!

Indeed, it's only an unconfirmed potential that they might expand their opposition to sites that support whistle blowers and other sorts of political dissent. We really shouldn't worry about it until they actually start denying service to such organizations.

 

[alohadave]

What incentive does Paypal have to actually enforce this? If anyone is complaining, it should be Ebay's shareholders, as this looks like a clear agency problem. Investors want to maximize profit, while it appears management has some personal/political/moral issue with locker sites and is spending extra cash to monitor them while simultaneously reducing revenue...

Investors haven't stopped them from prohibiting porn payments.

 

[Illidan]

This is why e-currency such as bitcoin is important. To give a credit card company or a online payment company like paypal control over web-purchases gives them the power to control the internet. For now they're using this power to discourage fringe illegal websites (except for wikileaks) but what stops them from expanding to other sites......

OMG SLIPPERY SLOPE!!!!

It's not a slippery slope at all. It's wrong, straight up, no question.

Paypal has no business demanding this.

 

[DarkAdmin]

This is a massive overreach on PayPay's part and I'd like to make several points against this move:


(1) Like another poster pointed out, they are increasing administrative burden and decreasing revenue. They cannot police every file locker service on the net, nor can they police every file.

(2) What constitutes and illegal file to PayPal may or may not be illegal to begin with. What is to stop PayPal from falsely identifying a file as infringing?

(3) What controls are in place at PayPal to prevent abuse of this "free access" into the file locker service. What is to stop a malicious PayPal employee from disseminating said illegal files? What stops said malicious PayPal employee from individually viewing or keeping files for themselves?

PayPay is, in effect, forcing file locker services to enter into another relationship ( IP enforcement partner) as a condition of using the PayPal financial processing service. I don't see how this will **not** cause a decline in revenue for PayPal. Not to mention the fact that it is unnecessary. I suppose PayPal's concern is that the government will launch a Megaupload-style freeze on their assets/operation because of a connection to a file locker known to encourage infringement. However, the government doesn't shut banks down because a single user launders money right?

PayPal is not really being a Pal to it's shareholders or users of its services...shame on you!

 

[steelgrass]

/me makes mental note to speculate in bitcoins. This must be the best news they've had all year.

 

[potato44819]

Seems like a good time for google to prove they do no evil and for these sites to migrate to google checkout.

 

[matthewslyman]

"...we don’t feel a 3rd party company has any business snooping on our users."

One might ordinarily expect PayPal to take a similar position, so as to avoid regulatory overheads. One is left wondering what might have changed their assessment, to make this new policy worthwhile for them.

 

[reflex-croft]

Paypal are govt lackeys as they will do anything they say as they don't want to be regulated like a bank. They'll brownose anyone they can to keep it that way. They ban political donations as displayed and they also have recently banned and seized the accounts of anyone selling a perfectly legal tea/supplement becuase someone in the FDA asked them too. Complete and total brownosing lackeys and the govt has the carrot on the stick of regulation dangling around to make sure they get them to do whatever they want. It's essentially a form of regulation and censorship without having to get laws passed or a democratic process to happen.

Paypal sent back my donation to cryptome and anonews.

Um, could it be that those selling the tea/supplement in general were doing so while making illegal claims? Because, you know, that would mean that the FDA and PayPal were engaging in consumer protection, which is actually a good thing...

 

[reflex-croft]

This is why e-currency such as bitcoin is important. To give a credit card company or a online payment company like paypal control over web-purchases gives them the power to control the internet. For now they're using this power to discourage fringe illegal websites (except for wikileaks) but what stops them from expanding to other sites......

OMG SLIPPERY SLOPE!!!!

Indeed, it's only an unconfirmed potential that they might expand their opposition to sites that support whistle blowers and other sorts of political dissent. We really shouldn't worry about it until they actually start denying service to such organizations.

I'm not saying that everything about this is right. I absolutely agree that they have the right to decline to do business with those they feel might be doing illicit business. I disagree that they should have any right to see user files(I think the article is a bit ambiguous on that, I have difficulty thinking PayPal would want the overhead).

So the thing to be pointed at as the issue is the implication that they will be monitoring user content on sites that they do not have any responsibility for. Not some theory that maybe in the future they might do something even worse. They might, but they might not. But in the meantime I think clarification is called for on the potential issue that they may actually be engaged in.

 

[reflex-croft]

/me makes mental note to speculate in bitcoins. This must be the best news they've had all year.

Bitcoins function as a sort of defacto ideology vs IQ test.

 

[Abresh]

/me makes mental note to speculate in bitcoins. This must be the best news they've had all year.

Bitcoins function as a sort of defacto ideology vs IQ test.

Only in your mind. If things keep on going like they are, where obviously legitimate companies who take down things when notified that they are infringing are deemed unjustly to be 'illegal', I see Bitcoin and other things like it taking off big time.

That's coming from someone who really doesn't like Bitcoin and can see the problems with it.

 

[avoidz]

I never heard of Bitcoin until I read these PayPal stink stories. Thanks. There are enough Internet Enforcers around at the moment as it is.

 

[danielravennest]

Bitcoins function as a sort of defacto ideology vs IQ test.

Perhaps intelligence, because it has not been explained very well in the past, but ideology doesn't enter into it in my mind. It is nothing more than a transaction network and set of account books, which use an arbitrary unit called 'bitcoins'. The various exchanges set the conversion ratios from national currencies to accounting units based on customer demand, not central bank policy.

Traditional banks make the user's name public (it's printed on checks and plastic cards), but keep the account books secret. The bitcoin network reverses this. User's names are not recorded, just account numbers, and the account books are public, so everyone knows how much every other account has. The transaction history is verified by a cryptographic method (the block chain). Since everyone can see who has what, no single person can decide to cancel your balance or close your account. If you want to transfer funds, you announce it to the world via the p2p network, and that transaction gets added to the verified history after a few minutes.

As long as there are ways to convert to and from your desired local currency, it does not matter what the accounting units are called or what the exchange ratio is in absolute terms. It only matters that the ratio does not change much between the time you convert from your local currency and the time the person at the other end converts back. In this way it is just like the Western Union system for sending funds, except with lower fees. You don't care how WU represents the funds being transferred in the middle of the transfer, as long at it is acceptable currency at both ends.

 

[slaimus]

I think Paypal probably got a lot of chargeback related fees from users who bought premium membership right before many of those sites stopped their sharing services, and requested their money back from their credit card companies.

 

[SirByte]

Any other minimal-risk options?

Bitcoin: you have a 'foreign exchange' risk, 20 Canadian dollars worth of bitcoin today isn't 20 Canadian dollars next month.

Moneybookers: just went there "Moneybookers is becoming Skrill" - what's going to happen with the smaller paypal-like services? Going to be bought out by one of the Big Guys and then have their TOS copy-and-pasted in?

This is there now:

11. Prohibited Transactions
11.1. It is strictly forbidden to send or receive payments as consideration for the sale or supply of:

(...)
Pornography, adult material, material which incites violence, hatred, racism or which is considered obscene
(...)
Items which encourage or facilitate illegal activities
(...)
Goods or services that infringe the intellectual property rights of a third party.

And:
We reserve the right, in our sole discretion, to add categories of prohibited transactions by adding such categories either to these Terms of Use or an acceptable use policy published on the Website.

And:
11.6. If you conduct or attempt to conduct any transaction in violation of the prohibitions contained in this section 11 or without the necessary approval under section 11.5, we reserve the right to:
reverse the transaction; and/or
close or suspend your Skrill (Moneybookers) Account; and/or
report the transaction to the relevant law enforcement agency; and/or
claim damages from you; and
charge you an administration fee of up to 150 EUR in case we apply any of the above.

 

[Thad Boyd]

...newsgroups too? Oh good.

 

[fuzzypig]

Last time I used a file site was Oron, they used a diect SMS payment scheme, (DaoPay I think?) rather than waste time with PayPal. Worked fine.

 

[friedzombie456]

This is why e-currency such as bitcoin is important. To give a credit card company or a online payment company like paypal control over web-purchases gives them the power to control the internet. For now they're using this power to discourage fringe illegal websites (except for wikileaks) but what stops them from expanding to other sites......

OMG SLIPPERY SLOPE!!!!

Damnit I have a compulsion to link to this video everytime someone says slippery slope
[link]http://www.youtube.com/watch?v=DJPm52rmKYI[/link]

 

[nom3ramy]

Bitcoin is great if you can trust the other party to deliver his end once you make your payment. This is generally true for the few established online merchants that accept bitcoin, and your transaction is a very small part of their total business.

However, it doesn't work for eBay-type transactions because of the trust issue. We really need a paypal-type intermediary that can deal with the trust issue, but could be trusted not to try to become a censorship tool to determine who can buy or sell what.

Geographical location of the replacement intermediary business would not matter so much. Any useful currency, including bitcoins, would work fine, as long as that currency is agreed to by both ends of a particular transaction.

The real problem is the initial critical mass necessary to get this to work. Once accepted as a payment alternative on an eBay-type site, even eBay could be forced to accept it in addition to PayPal, or face being eventually displaced itself.

 

[Doddler]

I doubt that this particular set of rules is made to go against people paying for services from file lockers, it's to take a stand against file lockers paying users for content uploads. File lockers paying clients to drive as many downloads through their service appears to be on shaky ground legally, and I can see why paypal wouldn't want to be the goto guy for handling those transfers. It's probably why mediafire isn't terribly concerned.

 

[FenderBender]

Devil's advocate here: PayPal has not only a right, but potentially a responsibility to ensure that its service isn't being used illegally. After all, they not only facilitate the transaction, they profit from it as well by taking a cut.

They're saying 'Prove that you are not using our service illegally or else you may not use the service.' Does that sound unreasonable? What would be an alternative to giving them access to a site's content in order to verify that it is compliant with the law?

As near as I can tell, both sides' arguments have merit. Is there middle ground?

 

[wangstramedeous]

Devil's advocate here: PayPal has not only a right, but potentially a responsibility to ensure that its service isn't being used illegally. After all, they not only facilitate the transaction, they profit from it as well by taking a cut.

They're saying 'Prove that you are not using our service illegally or else you may not use the service.' Does that sound unreasonable? What would be an alternative to giving them access to a site's content in order to verify that it is compliant with the law?

As near as I can tell, both sides' arguments have merit. Is there middle ground?

I assume you said that in jest. If I sold you a kitchen knife, I'd also like to make sure you aren't using it to murder your neighbor. I'd like to monitor what you are using it for.

For further reading:
http://www.emptywheel.net/2012/07/10/fi ... /#comments

 

[FenderBender]

I assume you said that in jest. If I sold you a kitchen knife, I'd also like to make sure you aren't using it to murder your neighbor. I'd like to monitor what you are using it for.

I'm sorry; that's just about the silliest analogy I've ever read. A knife is an inanimate object. Selling it to me does not make you complicit in a crime if that's how I choose to use it whether you were aware of my intentions or not.

Here's a better analogy: You're a cab driver. I'm going to rob a bank, I want you to be the getaway driver and I'm going to give you 3% of the take. You have a choice: tell me to pound sand or help me rob the bank. If you help me and I give you a cut, you're left with the dirty money on your hands and a dishonest act on your conscience. Are you suggesting that the cab driver should ignore the crime, look the other way, shut up and take the money?

The fact that PayPal has a right not to be forced to help facilitate and *profit from* illegal activities seems to be lost on a lot of folks. I was simply asking the question. You offered one-sided criticism but no solutions.

 

[bkaral]

Last I checked, Google Checkout Terms of Service required you to agree that they were allowed
to retain any collected credit information on you and do regular credit checks on you.

Can anyone comment on whether they think this is reasonable? In my mind, it's not, simply because I thought that was the job of the credit card company. I thought Google was there to simply act as intermediary (barring any verification to prevent fraud or similar).

Am I wrong or ??

 

[TeknoKid]

eBay has had some issues in the past with being seen as a place to purchase counterfeit goods. They have stepped up enforcement and partnerships with IP owners to remove such content but I see this as a proactive step they are taking with PayPal to avoid being seen as part of the problem and rather as part of the solution.