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Following Copyright Law Should Be Enough—Even When Payment Processors Say it Isn’t

DEEPLINKS BLOG
June 8, 2018

Following Copyright Law Should Be Enough—Even When Payment Processors Say it Isn’t

Imagine running an online business for 17 years, only to have your ability to collect payments suddenly turned off. No real explanation. It’s happened to Roz and Nir Arbel now—twice.

The Arbels run an online community called Soulseek. Originally intended to be a dating service, Soulseek today consists of various chat rooms that also allow users to share files. It’s a place where community and relationships have flourished. The site is particularly popular with underground musicians, their fans, and other creative types, who can easily chat with each other and share their work online.

Soulseek isn’t focused on profit, but the Arbels do take donations to offset their expenses from running the site. Those donations were processed by PayPal until the payment service abruptly terminated Soulseek’s service in February—with virtually no explanation and no coherent appeal process.

“Your account has been limited,” PayPal told Roz Arbel in a February email. Arbel was told the reason was that she had violated PayPal’s “acceptable use policy.” That policy, according to PayPal, stated that to run a “file-sharing” site, “pre-approval” was required from PayPal.

It was like watching a rerun of a bad movie. In the summer of 2015, PayPal had told the Arbels that “pre-approval” would be required if they wanted to continue doing business—then said the status wasn’t available. According to the Arbels, PayPal simply said it was “not granting pre-approval at this time,” and their account was cut off.

That time, PayPal changed its mind about the Arbels and Soulseek—but only after EFF intervened. Now it’s happened again, and once more, the Arbels have no clear explanation for why their account has been shut down. PayPal also locked Soulseek out of the records it needed to file its taxes properly and held on to $1,300 of Soulseek’s funds until EFF intervened again.

Sharing as a "Brand Risk"

What the Arbels are experiencing is a form of financial censorship that has, unfortunately, become increasingly widespread. Following the law isn’t enough—PayPal apparently expects a small message board service with a file-sharing function to do far more than the law requires.

PayPal explained to us that they will cut off sites that “allow for the transfer or download of copyrighted material.” Taken literally, that’s a staggeringly broad claim. Most written, visual, and audio material posted on the Internet is “copyrighted material,” because copyright doesn’t require any registration or notice, nor any commercial value.

Assuming PayPal means commercial entertainment copied without permission, it still doesn’t explain what got Soulseek in trouble. The site’s “Rules” section makes it crystal clear that the site doesn’t “endorse or condone” the sharing of copyrighted materials without permission, and mandates that users should only share files that they are legally allowed to share. The site hosts no files itself. It complies with the DMCA Section 512 safe harbor by accepting infringement notices and taking down content. The Arbels are fastidious about following the rules—they even have a copyright lawyer on retainer.

We asked if there was a particular copyright complaint that led to Soulseek getting cut off, but PayPal wouldn’t give us details on that. Major media and entertainment companies have tried for years to change copyright law, to require online intermediaries like PayPal to surveil Internet users and police copyright in draconian fashion. PayPal’s banning of services they deem to be “file-sharing” causes the same problems that Congress has, so far, avoided.

If payment processors were to cut off Internet services simply because they could be used for copyright infringement, a huge swath of the web would lose the ability to accept payments. Allowing sharing between users is a common and popular feature of many cloud storage services, including those run by Google, Microsoft, and Dropbox. As a matter of policy, Soulseek respects its users’ privacy by not surveilling their conversations or file exchanges. Violating users’ privacy shouldn’t be the price of entry for using a payment processor. It would be absurd to suggest that using a payment processor requires sites to police their own users for copyright infringement, when copyright law doesn’t impose any such requirement.

PayPal’s inscrutable “acceptable use” policy has a major effect on small websites, like the donation-based Soulseek, who may not be able to use multiple payment processors. Since being cut off by PayPal, the Arbels have switched to another payment processor. But they’ve seen a big drop in donations, in part because their new processor requires users to hold a major credit card. That cuts off Soulseek from being supported by users who don’t have access to, or don’t want to use, such a card.

Transparent Principles are Needed

Last month, we called on Facebook, Google, and other social media companies to do more reporting about how many user posts they take down, and why. When those companies enforce content guidelines, removing speech they think is inappropriate, the process should be “fair, transparent, proportional, and respectful of users’ rights.”

We’re asking companies that moderate online content to follow what we’ve called the Santa Clara Principles. It’s three simple ideas: Numbers, Notice, and Appeal. Companies should report how many accounts are permanently or temporarily suspended due to content guideline violations; provide clear notice of what content is prohibited; and provide human review, including a timely appeals process.

Another good step for payment processors would be to publish transparency reports, showing how often they shut down accounts at the behest of a government. We made a call for such reports just this week, and we’re gratified that one company, Stripe, has already agreed to create such reports.

Yanking services away from law-abiding websites and apps does nothing to fight copyright infringement, and the “acceptable use” policy that PayPal followed in suspending Soulseek’s account has been utterly opaque. In 2015, Soulseek was told to get “pre-approval.” The company did so, and then was cut off again, with no indication of how it could possibly get such “pre-approval” again. Cutting off vital financial services to an online forum can silence speech. Unfortunately, this type of financial censorship is increasingly common.

PayPal made it clear that they’re not willing to offer Soulseek financial services any longer. The company did give the Arbels access to their funds and tax documentation, after a request from EFF. Ultimately, we hope to see PayPal and other Internet companies be more open with the public about how they control content online. For payment processors, a good first step would be to start publishing transparency reports, that would give a sense of how often they’re shutting down accounts, whether at the behest of a government or rightsholders.

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