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Paypal Update [Update III]
10 years ago
Edit: Updates are at the bottom of the journal!
So a lot of people have commented on the previous paypal journal, which is super cool that people are active and invested in the issue. I'm really appreciative of opinions on varying points, and that others are investigating further.
We've also investigated further, with otterface having contacted a manager at Paypal to ask some questions and get answers for the concerns relating to Paypal's Services, the ToS, and AUP. We've got some corrections to what we previously believed. He had to call several times to find someone that was even aware of some of the issues we were concerned about, let alone be able to correctly interpret the ToS and AUP. Most of the customer service representatives we talked to before being put in touch with a manager did not understand the wording and legalese in the ToS and AUP. So, for anyone contacting about this situation for themselves, we might advise you to try and work your way up the ladder for a better answer.
What information we got was over the phone, so of course everything here will be paraphrased. This is not a definitive list in regards to Paypal. If you have a concern you should, of course, contact them directly and not just take our word on the matter based off of what we were told.
1) The $2,500 US Fine for AUP Violations
Does it exist? Yes. Does it apply to all AUP Violations? No. Despite the ToS stating otherwise, the information we got from the Paypal representative was that this fine is in relation primarily to the OFAC Rule. So, basically, illegal gambling, money laundering etc. In regards to specifically "certain sexually oriented materials or services", what it mainly pertains to is human trafficking and prostitution.
2) What else falls under "certain sexually oriented materials or services"?
This is a grey area, according to the representative, however what might also fall under this category would be photographic pornography and certain types of drawn pornography as well as dating services.
Otterface specifically asked in regards to the furry fandom, at which point the manager had to talk to yet another higher-up to get clarification. What we were then told was that tentatively most drawn pornography that is not "extreme" would be okay to sell through Paypal. But because furries are anthropomorphic animals it can potentially fall under a grey area where they might consider the artwork to be bestiality. We were provided an e-mail address that is a direct line to the the department that makes the decision as to whether or not content is appropriate for sale through Paypal, and were told that you can contact them with the artwork you're looking to sell in question and they will come back to you with a decision. How this may apply to commissions that have not been drawn as of yet, I do not know. Most likely, if you're following the rules and you're being smart and discreet, you won't run in to any trouble. Our AUP violations weren't for commissions, but rather selling a digital portfolio.
The e-mail address provided was AUP[at]paypal.com
For general questions, service[at]paypal.com was also provided.
3) Sending payments for services as gifts
First and foremost, is receiving payment for a service as a gift against the AUP? Yes. Will it instigate an action of the $2,500 fine? No (according to the representative).
We asked what would happen if someone was doing this and were told that, if you're caught you will be asked to cease doing that. If you persist your account will be closed, and your funds held.
But what if a client sends the payment as a gift instead of a service? If this is the case, the representative advised that you immediately refund the gift and send an invoice to the client instead.
In the event that you do have your account closed for avoiding paying fees and then try and circumvent Paypal by creating another account, or any other way of circumventing their decision in relation to your previous account, then at that point you may be at risk of being subject to the $2,500 fine.
4) Making your customers pay the fee
We asked about this as well, and if you're doing this then you're straight up in the wrong. This is not allowed, period. You will most likely be looking at account closure and funds being held if you're caught. You may be warned to cut that shit out first though.
5) Disputes regarding digital goods and services
In the event of a paypal dispute over delivered digital goods or services, there is currently no way to prove those products have been delivered. The representative said that a digital goods protection policy is being put in to place, and that there should be more information about it after July 2nd.
6) Other ways to circumvent the system
One additional thing we'd noticed in the community or similar communities in the same vein as ours, was using something like a "token" or "key" to be purchased instead of the actual product. So, for example, 'buy this token, then exchange it for this adult art pack' or 'buy this token then receive a password to access the special adult artwork' etc etc. We wanted to know if this was considered circumventing Paypal's policies, and the answer we received was 'Yes, it was'. So if you're doing that, then you should be aware that you haven't found a loophole in the system, and you may be at risk of action should you be caught.
This is more-or-less the sum of the information received from the representative talked to. To those of you still worried about the $2,500 fine, it should be noted that it does actually exist in the current ToS (the one last updated on May 1, 2015), so if you're using Paypal now then you've already agreed to it and have most likely been using the account while under its effects. Most likely, though, it won't be something you'll ever have to worry about (unless you're a crime lord).
Hopefully this will help relieve some concerns in regards to those using Paypal.
Another informative journal by
Spix can be found here, who also contacted a representative to get information: http://www.furaffinity.net/journal/6740803/
Now, the whole reason we mentioned previously not planning to use Paypal in the future isn't purely because of the wildfire and rumours going around about the fines, it was because we actually had actions taken against us. According to what the representative said, I would think that the products we got actioned for actually fall in line with everything she told us. So while I think that, overall, the information given here is good news for those that wish to continue to use Paypal, it still seems to be fairly unpredictable whether or not your adult content will abide by their rulings. At the very least, though, you won't be fined $2,500.
Update II: A few other people have been reaching out to Paypal inquiring on concerns (which I think is awesome). Biscuits appears to have specifically inquired on the $2,500 fine. The information Biscuits received is in conflict with the information we received. Please check out his journal for more information on what he heard from his Paypal representative: https://www.furaffinity.net/journal/6740786/
It may be that.... everyone is getting a different answer depending on their representative, or perhaps that those lower on the customer service totem pole are using their best judgement to interpret the AUP as best as possible.
Update III: Dahan pointed out a really good piece of information that Paypal has stated in writing in regards to the sale of sexually orientated material and what that means for digital sales of such content through their services. An excerpt from his link:
We don’t permit PayPal account holders to buy or sell:
Sexually oriented digital goods or content delivered through a digital medium. Downloadable pictures or videos and website subscriptions are examples of digital goods.
Sexually oriented goods or services that involve, or appear to involve, minors.
Services whose purpose is to facilitate meetings for sexually oriented activities.
Now what's interesting to me is that they say "buy or sell", which implies to me that both parties could potentially be held accountable. That's purely my interpretation and speculation though.
I also wanted to reiterate a point that Iruka mentioned in regards to what's been said here, which is that even though various representative have stated that certain things only apply in certain ways (ie. the fine applies to primarily the OFAC Rule), the ToS and AUP you agree to still gives them the ability to apply it to more than that, and you should keep that in mind. What a representative says, and what you legally agree to can be two totally different things.
So a lot of people have commented on the previous paypal journal, which is super cool that people are active and invested in the issue. I'm really appreciative of opinions on varying points, and that others are investigating further.
We've also investigated further, with otterface having contacted a manager at Paypal to ask some questions and get answers for the concerns relating to Paypal's Services, the ToS, and AUP. We've got some corrections to what we previously believed. He had to call several times to find someone that was even aware of some of the issues we were concerned about, let alone be able to correctly interpret the ToS and AUP. Most of the customer service representatives we talked to before being put in touch with a manager did not understand the wording and legalese in the ToS and AUP. So, for anyone contacting about this situation for themselves, we might advise you to try and work your way up the ladder for a better answer.
What information we got was over the phone, so of course everything here will be paraphrased. This is not a definitive list in regards to Paypal. If you have a concern you should, of course, contact them directly and not just take our word on the matter based off of what we were told.
1) The $2,500 US Fine for AUP Violations
Does it exist? Yes. Does it apply to all AUP Violations? No. Despite the ToS stating otherwise, the information we got from the Paypal representative was that this fine is in relation primarily to the OFAC Rule. So, basically, illegal gambling, money laundering etc. In regards to specifically "certain sexually oriented materials or services", what it mainly pertains to is human trafficking and prostitution.
2) What else falls under "certain sexually oriented materials or services"?
This is a grey area, according to the representative, however what might also fall under this category would be photographic pornography and certain types of drawn pornography as well as dating services.
Otterface specifically asked in regards to the furry fandom, at which point the manager had to talk to yet another higher-up to get clarification. What we were then told was that tentatively most drawn pornography that is not "extreme" would be okay to sell through Paypal. But because furries are anthropomorphic animals it can potentially fall under a grey area where they might consider the artwork to be bestiality. We were provided an e-mail address that is a direct line to the the department that makes the decision as to whether or not content is appropriate for sale through Paypal, and were told that you can contact them with the artwork you're looking to sell in question and they will come back to you with a decision. How this may apply to commissions that have not been drawn as of yet, I do not know. Most likely, if you're following the rules and you're being smart and discreet, you won't run in to any trouble. Our AUP violations weren't for commissions, but rather selling a digital portfolio.
The e-mail address provided was AUP[at]paypal.com
For general questions, service[at]paypal.com was also provided.
3) Sending payments for services as gifts
First and foremost, is receiving payment for a service as a gift against the AUP? Yes. Will it instigate an action of the $2,500 fine? No (according to the representative).
We asked what would happen if someone was doing this and were told that, if you're caught you will be asked to cease doing that. If you persist your account will be closed, and your funds held.
But what if a client sends the payment as a gift instead of a service? If this is the case, the representative advised that you immediately refund the gift and send an invoice to the client instead.
In the event that you do have your account closed for avoiding paying fees and then try and circumvent Paypal by creating another account, or any other way of circumventing their decision in relation to your previous account, then at that point you may be at risk of being subject to the $2,500 fine.
4) Making your customers pay the fee
We asked about this as well, and if you're doing this then you're straight up in the wrong. This is not allowed, period. You will most likely be looking at account closure and funds being held if you're caught. You may be warned to cut that shit out first though.
5) Disputes regarding digital goods and services
In the event of a paypal dispute over delivered digital goods or services, there is currently no way to prove those products have been delivered. The representative said that a digital goods protection policy is being put in to place, and that there should be more information about it after July 2nd.
6) Other ways to circumvent the system
One additional thing we'd noticed in the community or similar communities in the same vein as ours, was using something like a "token" or "key" to be purchased instead of the actual product. So, for example, 'buy this token, then exchange it for this adult art pack' or 'buy this token then receive a password to access the special adult artwork' etc etc. We wanted to know if this was considered circumventing Paypal's policies, and the answer we received was 'Yes, it was'. So if you're doing that, then you should be aware that you haven't found a loophole in the system, and you may be at risk of action should you be caught.
This is more-or-less the sum of the information received from the representative talked to. To those of you still worried about the $2,500 fine, it should be noted that it does actually exist in the current ToS (the one last updated on May 1, 2015), so if you're using Paypal now then you've already agreed to it and have most likely been using the account while under its effects. Most likely, though, it won't be something you'll ever have to worry about (unless you're a crime lord).
Hopefully this will help relieve some concerns in regards to those using Paypal.
Another informative journal by
Spix can be found here, who also contacted a representative to get information: http://www.furaffinity.net/journal/6740803/Now, the whole reason we mentioned previously not planning to use Paypal in the future isn't purely because of the wildfire and rumours going around about the fines, it was because we actually had actions taken against us. According to what the representative said, I would think that the products we got actioned for actually fall in line with everything she told us. So while I think that, overall, the information given here is good news for those that wish to continue to use Paypal, it still seems to be fairly unpredictable whether or not your adult content will abide by their rulings. At the very least, though, you won't be fined $2,500.
Update II: A few other people have been reaching out to Paypal inquiring on concerns (which I think is awesome). Biscuits appears to have specifically inquired on the $2,500 fine. The information Biscuits received is in conflict with the information we received. Please check out his journal for more information on what he heard from his Paypal representative: https://www.furaffinity.net/journal/6740786/
It may be that.... everyone is getting a different answer depending on their representative, or perhaps that those lower on the customer service totem pole are using their best judgement to interpret the AUP as best as possible.
Update III: Dahan pointed out a really good piece of information that Paypal has stated in writing in regards to the sale of sexually orientated material and what that means for digital sales of such content through their services. An excerpt from his link:
We don’t permit PayPal account holders to buy or sell:
Sexually oriented digital goods or content delivered through a digital medium. Downloadable pictures or videos and website subscriptions are examples of digital goods.
Sexually oriented goods or services that involve, or appear to involve, minors.
Services whose purpose is to facilitate meetings for sexually oriented activities.
Now what's interesting to me is that they say "buy or sell", which implies to me that both parties could potentially be held accountable. That's purely my interpretation and speculation though.
I also wanted to reiterate a point that Iruka mentioned in regards to what's been said here, which is that even though various representative have stated that certain things only apply in certain ways (ie. the fine applies to primarily the OFAC Rule), the ToS and AUP you agree to still gives them the ability to apply it to more than that, and you should keep that in mind. What a representative says, and what you legally agree to can be two totally different things.
We asked about this as well, and if you're doing this then you're straight up in the wrong. This is not allowed, period. You will most likely be looking at account closure and funds being held if you're caught. You may be warned to cut that shit out first though."
Someone should tell
they say so right on their commission sheet too.. YIKES
Some artists, like Ruki, explicitly ask that the BUYER pay this fee, IE they actually send $52-55 so that when Paypal takes the fee, the seller still receives $50.
This is NOT OKAY, and is against Paypal's ToS.
1) I am not a company
2) If you promise the seller 2 dollars for his work to give, it is unfair to give him only $ 1
3) Now, prices have indeed increased, and I put myself out invoices.
4) I do not know how many would have to be banned in Furry Acc paypal when it comes to the violation of the rules. (Especially with Porn)
I can't really speak for anyone that may have warned you about the paypal fees, but I imagine they were just concerned for you. No one wants to see an artist they like get into trouble if it can be avoided.
Love your art, by the way. Keep up the good work! :)
Proof: http://artists-beware.livejournal.com/683530.html
Same effect. How would you even be able to test this if they don't explicitly state "+x$ paypal fee"?
That price could be rationalized as electricity cost, equipment wear and tear, required snacks during arttime costs or anything that goes into the completion of the artwork.
Of course, I can only relay what I was told, so people will have to decide for themselves what risks they're willing to take. Seems silly that you could just call the fee something else and that suddenly makes it okay, but no one ever said huge corporations have to make any sense.
Best of luck to everyone using Paypal!
Thank you very much for posting this!
So far as I can tell you confirmed that not much has changed; you were always looking at potential account closure for taking too many 'gift' payments. That was known.
Glad to hear they'll give you a chance to rectify the accidental payment (if not doing invoices) as a gift first before slapping a fine on us.
Hurray! \o/
and its good to see some clarification on all this.
I did my own inquiring before offering my services too, with an elaborate e-mail of questions, and they were very clear about the issues; simply no porn (or other obscenities), everything else is fine ..of course I wouldn't cheat the system either and they thanked me for that as well ^-^ (keeping things legal is important)
Sefeiren provided a follow up journal with more details. Good on her!
I feel prepared. =)
Plus, as Wyldfire stated above, it's similar to a tax for the seller because they benefit from using the service. This is the way it usually works for other payment services too, like the merchant fee for Visa and Mastercard transactions. The onus is on the seller to pay it, and if the seller wants to raise prices to cover it, they can; but it breaks the merchant agreement to directly pass that x% on to the buyer.
Its YOU paying a fee, and paypal is leaving it up to you to either add the fee to your prices or not...as again some artist on FA actually dont mind paying the fee themselves (or in this case paypal taking their fee from the commission money) I dont charge a fee when I offer to colour art, I pay it myself
Generally speaking, I prefer to actively discourage people from paying the fee for me - I send payment requests for the exact amount they agreed to pay, and any fee is "the price I pay for using Paypal - and a lot cheaper than trying to deal with cheques or international money orders, so it's well worth it."
From what I'm gathering, adult-themed drawn artwork of characters would generally be allowable under the policy, but the biggest tangle appears to be the issue of whether or not drawn furry pornography is to be identified as instances of bestiality, in which case it would risk facing that steep fine.
The whole point of calling bestiality a vice is because it's a violation of some real living present animal. Otherwise, it has no moral basis whatsoever for being condemned, and thus cannot be prosecuted by any morally justifiable law. Therefore, unless the adult-themed furry art product in question is in some way associated with some particular real living nonhuman individual, to call it bestiality would be effectively calling it out as a victimless crime, and thus the punishment thereof morally groundless. And for the most part, the characters involved in furry art have no relation whatsoever to any real living nonhuman individual.
Now it seems to me the most likely counterargument to that would be that victimless crimes such as "animal-free bestiality" can in fact open the doorway to true crimes. In this case, however, we'd have to call out the "furry porn leads to bestiality" claim as committing the slippery slope fallacy, on much the same principle that we can't take seriously the "violent games lead to acts of violence" claim. To prosecute marketing furry art on the basis of bestiality would presuppose a moral principle that would require prosecuting Alice selling a copy of GTA to Bob on the basis of murder. The principle has no rational solidity, and its flaws are all the more egregious given the level of severity of the fine it's being connected to.
Not sure if that helps, but my two cents. Something to hold onto for future encounters with prosecution, maybe? In the meantime, I'd go with Sefeiren and say discretion is best.
Though if there is such a law like you suggest, explicitly prohibiting the sale of victimless digital porn in Paypal's ToS from one consenting adult to another, I'd be very curious to hear the justification for it.
We'll cross that bridge when/if we get there, I suppose - if it ever comes to the point that Paypal starts to crack down on adult furry art marketing en masse, or if someone actually does try to play the bestiality card.
Anyway, as I have stated on other journals of this nature, the likelihood of PayPal finding out per transaction is very remote if artists don't make any 'wrongdoing' obvious or detectable, and the likelihood of them penalizing someone with a fine in those unfortunate events where they detect a violation is very remote. So, people should not be gripped by panic and overhaul their entire financial strategy overnight. However, despite the words of some of the PayPal representatives, they MAY fine anyone for any violation theoretically, and I'm sure they are deliberately so vague in their ToS to engender fear. Especially if the person deciding the case sees furry porn as 'bestiality' and there's a further aggravating factor such as it being cub (I never understood people's fixation on fictional underage porn) or otherwise an 'extreme' picture, conceivably, someone could be fined 2,500 merely for drawings.
As I understand it that kind of thing isn't exclusive to online porn. It's basically the same idea as the fact that we violate all kinds of tiny little traffic laws driving that are barely ever enforced, and really only surface when (1) the violation leads to some inordinately large amount of damage, or (2) enforcers want an excuse to prosecute some person.
Basically, this is the point where we have to differentiate between law on paper and law enforced in the real world, and start using the same real-world legal sense that we would use in something like driving in traffic. In both situations we're probably violating something on paper no matter what, but if it's not enforced it practically doesn't exist in the real world so long as the violations don't blow up into anything huge and we don't give enforcers a reason to pay too much negative attention to us.
I would imagine a wise approach would be to continue to use Paypal for softcore or tasteful or otherwise mild adult art, and for more extreme cases have a more sensitive alternative method of payment. The way I see it here I don't really see significant reason to do something extreme like flat out boycott Paypal entirely, but having an alternative method for more extreme artworks might be the sensible thing for an artist to do, if more private methods are available.
As you've laid the information out here it's very clear.
- With regards to the fines, that's usually what those types of fines are for. So that seems alright on their part.
- However, what is slightly worrying is that each rep has a very varied interpretation of the legal jargon. A company such as paypal needs to have one line of interpretation which is laid down by a higher up. Unless they are being purposefully shady about it. Which often does happen when you have it worded badly, or on purpose.
- I myself was mostly worried for artists who have to deal with scamming clients, since they would often cause disputes and trigger questions from Paypal, which if answered would likely get you a suspended account. In such cases I feel the scammer would very probably now get the 2.500$ fine. Which I hope is the case to finally dissuade scammers once and for all.
- Also people need to realize Paypal is a company. So it's not likely they are purposefully being dicks. This is just how the real world works. I have similar issues at my job, which are interpreted as purposefully malicious or cheating towards our clients, when in fact that's very far from the truth. We operate on an honour system.
Once again thank you for all he info!
Honestly, this is why I'd always buy a few pieces of clean art from an artist, and state clearly that if they discovered any sexually oriented pieces, I would be adamant that I paid them in cash, which I'm sure any artist would back me up on. And if I used a piece by an artist twice as evidence and they pulled me up about it? I'd say that after further evaluation, I felt that the piece was worth more than the artist initially offered and felt compelled as a lover and supporter of artists that I wanted to pay them further for their fantastic work. The worst they can do...is tell me that I should have given it to them as a gift...which would result in THEM paying back the fee.
Also, isn't that part open to interpretation to the point that a member of staff could in fact perform an act of discrimination?
Now I am waiting to see what will be your move concerning using or not PayPal still to sell your goods. In any case, I will definitely follow you
Google Wallet looks great for US customers (Hanazawa's post with alternatives was a huge help, found here: http://www.furaffinity.net/view/15473003/ ) and I've known about Square for years, but never knew Square required no sign-up for buyers, so I'll definitely be checking them out. That really removes the one obstacle to requiring customers to use a method other than Paypal. Every little thing matters, y'know?
Thanks again for researching all this~
Even though I don't really understand the reasoning behind making sure that the service side of transactions receives a burden, like making sure that there is $1.25 taken out of their user-agreement price aka profits. I may be preaching to the choir here, but...
Suppose that I'm obsessive compulsive about rounded numbers in my profits. I would want to add the $1.25 (+) cost as total cost to the commissioner so that I get 10, 20, 30, or whatever even. $1.25 on any end would drive me crazy though, I wish it was an even number.
If I add $2USD flat, I think that the extra $0.75USD would be misunderstood and unfair to the commissioner aka service user.
There's got to be a way to satisfy an OCD while abiding by the rules; and inversely, there's got to be a way for sellers to pay the fee after the transaction and not before receiving the payment for goods and services. Again, probably preaching to the choir.