PORN
If you're trolling the Web for adult content, bring along a healthy appetite and a high-speed connection. But don't bring your American Express card. Amex recently announced it would no longer accept credit card transactions for digital content on porn sites due to the high number of disputed charges. And while Visa and MasterCard still service the adult industry, both companies recently have slapped fines as high as $100,000 per month on site operators whose chargebacks from disputed transactions exceed 1 percent of overall activity.
Since most adult sites rely on credit cards, both for payment and as proof of age, the restrictions are hitting hard. "It makes it almost impossible to exist," says Seth Warshavsky, CEO of the Internet Entertainment Group, one of the Net's largest purveyors of adult entertainment. Warshavsky and IEG are under investigation by the federal government for possible credit card fraud and income tax evasion.
The crackdown by card companies comes in response to sleazy practices by some porn sites, including double-billing, "free" trials that turn into recurring monthly charges, and confusing or downright deceptive cancellation policies. But porn providers who feel they're being targeted unfairly are fighting back. Andrew Edmond, whose Flying Crocodile firm hosts more than 120,000 adult sites, has set up Credit Card Watch, an organization aimed at countering the credit card companies' punitive measures. The group is lobbying card companies to protect merchants from customers who purchase adult services, only to deny it when the bill arrives.
"These [credit card companies] are private enterprises that control trillions of dollars a year," says Edmond. "Yet there is no due process, no way that we can sit down and go through a governmental process to change policy. We are Internet citizens on the same Net with Amazon."
The effort may get a boost from the Department of Justice's antitrust case against Visa and MasterCard, which could generally rein in card company practices. And there's already evidence that adult sites aren't the only ones that stand to lose from restrictive credit card policies. Other Internet businesses, including travel sites and dating services, have reported receiving warnings to keep chargebacks down - or pay a heavy price.
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