Credit-Card Firms Are Becoming Reluctant Regulators of the Web

An anonymous reader quotes a report from The Economist: Who should police the internet? For some time now the question has tied companies, regulators and campaigners in knots. Social networks spend billions moderating content posted on their platforms, but are still criticized either for not removing enough toxic material or for stifling free speech. They are not the only ones to grapple with the problem. Banks and credit-card companies too are finding themselves playing a bigger role in what is said and done in the public square -- to their, and their customers', discomfort. Now the boundary of censorship is being extended further, into the pornography business. From October 15th adult websites worldwide will have to verify the age and identity of anyone featured in a picture or video, as well as the ID of the person uploading it. They will need to operate a fast complaints process, and will have to review all content before publication. These requirements are being imposed not by regulators but by Mastercard, a credit-card giant. Websites can always choose not to work with Mastercard. But given that the company handles about 30% of all card payments made outside China, to do so would be costly. Visa, which manages a further 60% of payments, is also taking a firmer line on adult sites. And the trend goes beyond porn. In the shadier corners of the web, and in industries where the law is unclear or out of date, financial firms are finding themselves acting as de facto regulators. [...] Visa and Mastercard's near-duopoly on card payments makes their decisions more powerful -- and the firms prime targets for protesters. In 2019 SumOfUs, a left-wing pressure group, tabled a proposal at Mastercard's annual meeting meant to stop payments to far-right groups. (The proposal was defeated.) Thirty-four women are suing Visa along with the owners of Pornhub, an adult site which they say hosted unconsenting footage of them. Illegal-porn sites "care a lot more about their finances than they do about the law," says Laila Mickelwait, whose Justice Defense Fund helps sex-abuse victims litigate. And, she adds, when financial firms change their policies it applies globally. Last year Visa and Mastercard cut off Pornhub over its hosting of potentially unlawful material. Payment companies in particular face a philosophical dilemma. "On one hand they try to be very open, accepting, willing to facilitate payments for whomever. They're not taking any sort of political or moral stance," says Lisa Ellis of MoffettNathanson, a research firm. "But on the other hand, they also feel like they have a very strong responsibility in making sure that they're not aiding and abetting any sort of crime." Visa and Mastercard both say that, as global companies, their guiding principle is local legality. (This can throw up some surprises: one executive recalls being informed by clients from a Scandinavian country that bestiality was legal there at the time.) Things are not always black and white. In 2017, after a far-right march in Charlottesville, Virginia, Mastercard shut down the use of its cards on websites that had made "specific threats or incite[d] violence," but kept dealing with other sites labelled hate-groups. "Our standard is whether a merchant's activity is lawful, even when we disagree with what they say or do," the company said at the time. In grey areas they have reason to err on the side of caution. Payment networks' risk of liability tends to be low, since they operate at one remove from the merchants. But being named in a sex-trafficking complaint or accused of helping Nazis does not look good. In working with a borderline adult site, for instance, there's "not a lot of upside and a lot of downside", says Ms Ellis. And in legally tricky areas it can be cheaper to issue a blanket ban than pick through every difficult case. Banks may steer clear of countries that are not embargoed but which have a lot of people on the banned list, "to minimize the burden of determining whether every transaction is compliant," says Jonathan Cross of Herbert Smith Freehills, a law firm. [...] For as long as legislation lags behind, financial institutions will be left in a difficult position: either accused of being the "moral police," as one executive puts it, or of enabling wrongdoing. As Richard Haythornthwaite, then Mastercard's chairman, told the protesters at the firm's annual meeting in 2019: "If it is lawful, then we need to respect that transaction. If it is something that is swimming against the tide of society, it's for the society to rise up and change the law."

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