It is a capital mistake to theorize before you have all the evidence.
— A Study in Scarlet
Having recently said that they didn’t want their service used for certain categories of erotica, PayPal have had a rethink, and posted a further, emollient blog piece to “clarify” the situation and explain how they would “implement the policy”. Or, to put it another way, they have largely backed down. This second blog piece is nearly as recondite as the first, and it takes some effort to understand what they are saying. While they initially incriminate e-books with images, they don’t permit the use of PayPal for child pornography, with or without images. At least, that’s what I think they mean.
The other classes of erotica are, as before, bestiality, incest and rape; and to repeat, they are concerned about only e-books with images, images that might be obscene under the US legal definition and “guidelines”. They don’t explain why text-only e-books are excluded, nor why printed books, whether with or without images, are also excluded.
And who is going to decide if the images are or might be obscene? Why, PayPal themselves. They’re not going to target the genres, rather they will go after individual titles. Clearly, they don’t trust their merchants, which given PayPal’s recent economy with the actualité in relation to both Visa and MasterCard, isn’t a very surprising attitude on their part. And all this surveillance despite merchants and authors saying that, apart from the front cover and perhaps a photograph of the author, these works aren’t illustrated. Is PayPal going to employ an “obscene image operative” to check? While PayPal’s operative might rely on the guidance in the US Miller test, it’s only when a product has come before a court and found to be obscene that it is obscene. A legal opinion is merely that; an opinion on what a court might decide, not a statement of fact; and lawyers are inherently cautious.
From what various commentators have posted, I understand that while they can have a vendor account with PayPal to sell their books, they aren’t instantly paid by PayPal when they sell something; rather, the money accumulates in an account, and only when a given limit is reached is the money released to them. I’d guess that this allows PayPal to lend the sums in the vendors’s accounts overnight on the market at the going rate of interest. (This is what banks do with the money in your current/checking account.) So, PayPal gains interest on the capital of others.
Could this be part of PayPal’s fear? That they could be seen to be profiting from the sale of obscene, and therefore illegal, e-books (or from the images). It doesn’t really seem like living “on the avails” or “from immoral earnings”, but then there are plenty of vexatious litigants around. Further, I imagine that Visa and MasterCard remit any monies directly, so they could argue that their involvement is as if it were a cash transaction. (And no one would try to incriminate the Federal Reserve or the Bank of England if their paper money was part of a transaction that involved illegal activity.)
And printed on paper books — “dead tree legacy articles” — why are they excluded? Is it enough to expect the US Post to intercept such articles under the Comstock laws or their modern equivalent? And what about international deliveries, whether of e-books or printed material? Repulsive régimes overseas don’t allow their citizens internet access, so why worry?
I’ve seen comments about PayPal’s Terms of Service, and how they can confiscate the monies in authors’s account, for infringements of these Terms; and I’ve seen comments comparing PayPal to the “religious right”. Not a very scientific survey, I grant you, but these random snippets give a flavour of PayPal’s corporate culture.
As I said previously, I’m still convinced that PayPal is scared of something; and that something fearsome has been brought to their attention either by outsiders, or possibly from within their own ranks. One response of the fearful is to close ranks and minds, and this does seem to have been their initial reaction. After some thought, and without wanting to appear as if they are back-tracking, they “clarify” their position — and they have certainly changed their position vis-à-vis their initial one.
Have PayPal found themselves in the position where their (moralistic) corporate culture has been sufficiently disturbed by erotica to want to censor it, even if it’s legal; where they felt that they could be implicated in the distribution of “obscene” material, and be thought to be profiting therefrom; and where they assumed that they could ignore the protests of authors and publishers?
I should take Sherlock Holmes’s advice before I theorise further; I don’t have enough facts to justify more conclusions. But, perhaps an investigative journalist would be interested; or an MBA student looking for a case study?
Edit 20 March 2012: I’ve just read this blog piece on the Independent, though it was written a week ago. It seems that PayPal’s founder, Peter Thiel, found himself in a difficult position, as a libertarian supporter of republican candidate Ron Paul, he couldn’t be seen to be approving censorship.