Credit-card firms are becoming reluctant regulators of the web

WHO SHOULD Crack down on the internet? For some time, this question has connected businesses, regulators and activists. Social networks have spent billions of dollars moderating content posted on the platform, but have been criticized for not removing enough toxic substances or suppressing free speech. They are not the only ones to tackle the problem. Banks and credit card companies are also aware that they play a bigger role in what is being said and done in public squares, the discomfort of them and their customers.

The boundaries of censorship are now expanding into the pornography business. Starting October 15th, adult websites around the world will need to verify the age and identity of the person appearing in the photos and videos. ID Of the person uploading it. They need to handle grievances quickly and review all content before publishing. These rules are imposed by credit card giant Mastercard, not by regulators.

Websites can choose not to use Mastercard. However, this is costly because the company handles about 30% of all card payments made outside of China. Visa, which manages 60% of payments, has a strong position on adult sites. The trend goes beyond pornography. In the shadowy corners of the web and in areas where the law is unclear or outdated, financial companies act as de facto regulators.

Since the turn of the century, “payment has become a tool for national and international policy,” says Aaron Klein, a think tank at the Brookings Institution. After the 9/11 attack in 2001, the United States introduced new anti-money laundering rules and more targeted sanctions. Financial companies need to block payments to people on the 1,604-page list today.

The government has also begun to use banks at home for help. The enthusiasm for online poker prompted the United States’ illegal Internet gambling enforcement law in 2006. This made it responsible for blocking transactions with the payable company, not the internet service provider that allowed access to the poker site. As most American states have somehow legalized the cannabis industry, its growth has been plucked by federal law that discourages banks from dealing with marijuana cannabis.

By handing over the enforcement obligation to the company, the taxpayer is exempt from some of the costs. It’s not uncommon for the following major banks: HSBC Or hire more than 20,000 JPMorgan Chase, risk and compliance professionals. In 2017, consultancy Accenture believed that technology companies employ approximately 100,000 content moderators.

The effect is also freeing politicians from making difficult decisions. “Policing involves … achieving social consensus on difficult issues, which is becoming more difficult in the United States,” says Klein. If a bank refuses to do business with a customer because of “reputation risk,” it may mean “bank regulator.” [has been] Whispering to them, “We don’t like you being in this business,” says Greg Vale of the Banking Policy Institute, an American trade association.

Activists are also putting pressure on them, and companies are dropping unpopular customers. Following protests over riots in January We The Reichstag, Deutsche Bank and the Signing Bank have closed their deal with then-President Donald Trump, and Signing has called for his resignation. Mr. Trump probably found that other banks were willing to work with him. However, some industries believe that a sufficient number of banks can be a problem. In August, the site known for adult content, OnlyFans, said it would not allow explicit expression due to pressure from partners, including: BNY Melon, Metrobank, JP Morgan (no comment). The ban was eventually revoked after the indignant professional porn activists turned out to be even more noisy than the rebels.

Due to the nearly duopoly of Visa and Mastercard, businesses have become a major target for protesters. In 2019, left-wing pressure group SumOfUs submitted a proposal at Mastercard’s annual meeting aimed at suspending payments to the far-right group. (The proposal was rejected.) 34 women are suing Visa with the owner of Pornhub. Pornhub is an adult site they say host videos without their consent. Illegal pornographic sites “focus on finances over law,” said Laila Mickelwaite, a judicial defense fund that assists in litigation of victims of sexual abuse. And she adds that when financial companies change their policies, it applies globally. Last year, Visa and Mastercard blocked Pornhub over hosting potentially illegal materials.

Payment companies face a philosophical dilemma. “On the other hand, they are very open, accepting and willing to make payments easy for everyone. They do not take any political or moral position.” Says Lisa Ellis of research firm Moffett Nathanson. “But on the other hand, they also feel very responsible for preventing them from supporting or betting on any kind of crime.”

As a global company, both Visa and Mastercard state that their guiding principle is local legality. But things are not always black and white. After a far-right march in Charlottesville, Virginia, in 2017, Mastercard “stopped using the card on websites that made certain threats or incitements.[d] “Violence” continued to deal with others labeled as hate groups. “Our standard is whether the merchant’s activities are legal, even if we disagree with the merchant’s statements and actions,” the company said at the time.

In the gray areas, there is a reason to be careful. The risk of liability tends to be low because the payment network operates in one place away from the merchant. However, it doesn’t look good to be named for sexual trafficking complaints. For example, when working on a borderline adult site, “there aren’t many advantages and many disadvantages,” Ellis says. And in legally tricky areas, it may be cheaper to issue a total ban than to select all difficult cases.

In policy areas where the law has not yet caught up, financial companies may end up creating their own regulations. Some cases are harmless. In 2019, Mastercard introduced rules to companies offering free trials, requiring them to warn their customers before they start paying. However, other policies include actual trade-offs between values ​​such as freedom of speech and security. Mastercard’s requirement for adult sites to screen content before it’s published should help eliminate illegal material, but it’s likely that there will be fewer legitimate types. The company proposes to block sites that use artificial intelligence to “nadify” dressed images. This does not violate the law in most countries. Executives at another company wonder if such a rule should be made by the government instead. “If it’s gray, which one do you decide?” He asks.

As long as the law is late, financial institutions are in a difficult position. As one executive says, he is accused of being “moral police” or allowing cheating. Richard Haythornthwaite, then Chairman of Mastercard, told protesters at the company’s annual meeting in 2019: “If it’s legal, you need to respect the deal. If it’s swimming against the flow of society, it’s about getting society up and changing the law.” ■■

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This article was published in the printed version of the Treasury and Economy section under the heading “Plastic Police Officers”.

Credit-card firms are becoming reluctant regulators of the web Source link Credit-card firms are becoming reluctant regulators of the web

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