We’ve written before about the dire consequences to online speech when service providers start acting like content police. These same consequences are applicable when financial services make decisions about to whom they provide services.
Just as ISPs and search engines can become weak links for digital speech, too often financial service providers are pressured by the government to shut down speech or punish speakers who would otherwise be protected by the First Amendment. It’s unclear whether this is an example of government pressure, an internal corporate decision, or some combination.
Chase has yet to give an official statement on why the accounts are being closed. At least one of the customers affected by Chase’s decision to shut down adult entertainers’ accounts, Teagan Presley, was told by Chase that her account was being shut down "because she’s considered 'high risk.'" According to NY Daily News, her husband Joshua Lehman (whose account is also being closed) reports receiving conflicting information from Chase about why the accounts were being shut down:
I've heard three different reasons...When I went into our branch, they said it was the nature of our business. When I called, they said they were closing my personal account because my wife is an 'infamous' adult star. When I talked to my branch again, they said it wasn't because we were in the adult industry but because we did business with a convicted felon.
This isn’t the first time Chase has been under fire for morality-based account closures. In 2013, Chase faced a lawsuit from the founder of MRG Entertainment for denying loans to people within the adult entertainment industry. And just a few months ago, Chase refused to process payments for Lovability, an online condom store. After bad press and public pressure, Chase reversed its decision, but it’s unclear whether Chase ever changed the policies that led to the decision in the first place.
Of course, Chase is not obliged to do business with anyone, provided it stays on the right side of the law with regard to discrimination practices. The First Amendment protects the free speech rights of individuals against government censorship, but it does not protect individuals against censorship by nongovernment actors. And indeed, Chase may have First Amendment rights to decided with whom it does business. But Chase is leveraging its position as a powerful financial institution to cut off the accounts of adult performers not accused of any crime, forcing them to make hard choices between their chosen career and their banking institutions.
When it’s just Chase Bank that’s engaged in this type of morality policing, it’s not difficult for performers to take their business elsewhere. But one could easily imagine this becoming an industry standard, where fewer and fewer banks tolerate the accounts of those who make their livelihood as adult performers.
Since Chase hasn’t made any statements about where it draws the lines for who will and won’t be targeted in this crackdown, one might imagine this slowly creeping to affect anyone within the adult entertainment industry. Will the camera operator, the director, the promoter, even the local video rental store owner eventually suffer consequences for being associated with an industry that Chase Bank thinks is immoral?
This is particularly troubling because “pornography” itself is subject to interpretation. While the crackdown currently affects mainstream, prominent performers, it could quickly turn into a bank account ban for radical and feminist porn. We’ve seen examples of this in the past. For instance, Cindy Gallop, who hopes to revolutionize pornography and cultural acceptance of human sexuality through her website MakeLoveNotPorn.com, struggled to find any bank that would do business with her in the United States. Artists of all stripes should be concerned about this unnecessary encroachment on free expression.
Similar instances have been related to the Department of Justice’s program Operation Chokepoint. Operation Chokepoint was launched in 2013 "reportedly to crack down on online payday lenders and others industries identified as ‘high risk’ for fraud." It has been called "stop-and-frisk for banks… regulators frisk the bank by sending a subpoena for all the financial information on their clients that could potentially be up to no good. If the government finds something suspicious, it investigates further." This further investigation can lead banks to simply shut down the accounts of clients that are targeted in the investigation.
As Frank Keating, president and CEO of the American Bankers Association, wrote in a recent Wall Street Journal article:
Operation Choke Point is asking banks to identify customers who may be breaking the law or simply doing something government officials don’t like. Banks must then 'choke off' those customers’ access to financial services, shutting down their accounts....The government is compelling banks to deny service to unpopular but perfectly legal industries by threatening penalties. This puts them in a difficult business position.
While one can certainly understand a bank shutting down an account in response to a legitimate government order, in this case it's unclear whether Chase is reacting to government pressure or acting on its own initiative. One thing is clear: Chase is censoring the accounts of individuals who have not been charged, much less convicted, of crimes in the United States.
Society doesn’t benefit when financial institutions take on the role of arbiters of our speech and action. We already have plenty of morality police in the world; we don’t need to add banks to the list.