December 1, Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications.
She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of kfreelancer. Ask Elaine a questionor see if your question has already been answered in the Your Business Credit answer archive. Dear Your Business Credit, Can a merchant legally debit a customer's card without their knowledge or consent?
Credit cards fees Understand merchant account fees
Merchants must get a customer's permission to process charges on his credit or debit card under the Electronic Funds Transfer Act.
Otherwise it is an unauthorized purchase. The law defines an unauthorized electronic funds transfer as one initiated by someone other than the consumer "without actual authority to initiate such transfer and from which the consumer receives no benefit.
When a customer comes into a store, swipes a signed credit card and signs the receipt, that is the most obvious type of consent.
Filling out a form to make an online purchase or giving your debit card number by phone to a merchant are other types of consent. However, the merchant must take certain steps for the transactions to be valid.
Understanding 'consent' to charge a card
Card networks such as Visa and MasterCard publish extensive rules for how merchants must properly process transactions, whether they conduct them in person or in situations where the card is not present. One common source of complaint by consumers is the recurring charge. Under Regulation Ea set of rules for carrying out the Electronic Funds Transfer Act, merchants who are going to make a recurring charge -- for instance, for a monthly gym membership payment -- need to get advance consent that is in writing "or similarly authenticated" to make these charges and give the consumer a copy of the consent form.
If the charges will not take place at set intervals, the merchant has to send the customer a notice of the amount and the date of the transfer at least 10 days before. What if consumers want to stop these recurring payments?
They must provide notice to their card issuer at least three days before the transfer. These payment processing authorities have also coerced websites to cease featuring sexual content under threat of service withdrawal, all while blaming ambiguous rules or pressure from one another. Monday a federal appeals court ruled that pressuring credit card companies like Visa and Mastercard to stop doing business with speech-protected websites violates their First Amendment rights.
Specifically ones that feature content from sex workers. And in June, the FDIC clarified that it's against the rules for businesses like PayPal, Chase and Square to refuse business or close accounts based on "high risk" assessments related to human sexuality. But it may not be enough to stop what's become an entrenched pattern of systematic discrimination by payment processors -- one that disproportionately denies financial opportunities for women.
Unfortunately, that application surfaced the nature of our business within higher levels at Chase.
And it resulted in a meeting with a more senior guy, who essentially said to us, not only can we not give you a commercial account, but you now need to close your business bank account and take your business away. The year after that,Chase conducted a campaign of targeted sex-industry bank account terminations -- but this time, the closures made headlines.
But at the same time porn stars had been told their accounts were being closed, Chase refused to process payments for condom company Lovability, telling CEO Tiffany Gaines that "processing sales for adult-oriented products is a prohibited vertical. However, Gaines said when the CMO of Chase Paymentech called to "apologize for the 'misunderstanding' she agreed to process my company's payments but would not agree to officially remove condoms from the 'prohibited adult' category.
Since the s, actual maps with red lines were used by banks to demarcate black and hispanic neighborhoods, and redlining became a verb: To redline a community was to cut it off from equal financial access, rights and opportunities. Being redlined was a death sentence for getting out of poverty. In Chase began a targeted campaign of account evictions in a neighborhood called porn.
PayPal, Square and big banking's war on the sex industry
One of the victims, performer Teagan Presley, told press that Chase's stated reason was because it considered her line of work to be in a "high-risk" category. When reached for comment on the closures of porn stars' accounts, Chase told Engadget, "We did not make any blanket account closures related to this specific industry. So let's call this "weblining. Weblining's targeted populations are porn performers, sex workers, independent retailers, erotic writers and the internet's new generation of online pornographers: We take this very seriously.
Or, they just invoke a "right to refuse business" clause. PayPal pressures Patreon under threat of cutoff Indisputably, the Internet ushered in an empowered landscape for sex workers and porn stars alike to finally have their own voice and be heard.
Interestingly, with this came an eager market for women-run and -directed porn businesses, as well as erotica by and for women.
Sadly, in this new sex-information ecosystem, denial of access to economic opportunity has also blossomed. Nowhere is the practice of weblining more evident than with PayPal. For over ten years PayPal, the world's most ubiquitous payment processor, has emerged as the king of denying service, seizing accounts and freezing funds for anyone discovered to be associated with sexual content online -- even educational or artistic content.
Bank of America Merchant Statement Malware Email
The stories about PayPal's denial of financial services to anyone discovered to be in sex "neighborhoods" are plentiful. It's troubling to note just how much the impact is disproportionately on women.
PayPal's Acceptable Use Policy states that the PayPal service may not be used for activities that "relate to transactions involving PayPal banned dominatrix January Seraph in and any business run or owned by her "for life.
Blogger and adult industry writer Cara Sutra was banned for selling a corset. Former escort Vicki Gallas was banned from using PayPal to process payments for her memoirs, because they included sex work. Seattle Erotic Art Festival had their account frozen even though they only used the service to process fine art submission fees.
Apparently, PayPal also has no problem making other businesses to do its content policing. In MarchPayPal nailed subscription-model crowdfunding platform Patreon, which emailed its users saying"We got a notice from Paypal this morning that they were shutting down their entire integration with Patreon because of "adult content" on our site!