Mar 24, 2023
Collateral Damage in the War on Sex Trafficking
(Bloomberg) -- Gwen Adora said it was 2018 when she started uploading videos of herself to Pornhub, one of the Internet’s biggest sites for adult content. She used the money to pay her bills while pursuing a Bachelor’s in Communications and Multimedia Studies. By posting videos users would pay to see, she was able to earn as much as $1,500 a month—enough to cover school and living expenses.
Her story is far from unique. For almost two decades, an untold number of creators of sexual content have made money this way. But in the five years since Gwen started posting, the industry has come under intense legal and financial pressure. Bloomberg spoke with several adult content creators (all of whom like Gwen requested we use their online names for reasons of personal safety) who said their livelihoods have been jeopardized from the fallout of efforts to stop child exploitation and sex trafficking—both of which are widespread online. They have also been the target of conservative groups that oppose online pornography in general.
Now, there’s a federal lawsuit making its way toward trial that could raise the stakes significantly. A young woman is suing not only Pornhub’s owner, Luxembourg-based MindGeek, for circulating a graphic video of her taken when she was a minor, but also the credit card company that helped process the site’s transactions, Visa. Filed in Los Angeles federal court under a 2018 anti-sex trafficking law, the industry claims the case has already had negative consequences for individual content creators. Some of them allege increased financial discrimination, which they warn creates the conditions that allow sex trafficking to spread.
More broadly, First Amendment lawyers said the litigation, not unlike another case pending before the US Supreme Court, could upend how the internet is policed—to the detriment of free speech and expression well beyond online porn.
Pornhub and websites like it used to overflow with illegal and pirated sexual content uploaded by unverified users, something online performers contend they have spent years urging sites to remove. Then, in late 2020, a spate of negative attention (triggered in part by a New York Times opinion column) thrust the website and the issue of online child pornography into the spotlight.
MindGeek (which was purchased last week by a private equity fund) scrambled to respond by erasing more than 10 million videos, or 80% of Pornhub’s content. It pledged to require that those uploading content provide scans of their face and a government-issued ID, and that it would review each video and require releases for all who appear—to guarantee they aren’t minors and consented to the use of their image.
Read More: Pornhub Parent Acquired by Private Equity Fund
But it was too late. Payment giants including Visa and Mastercard quickly suspended ties with Pornhub. In the three years since, more credit card companies and payment processors have tightened their rules when it comes to adult content, forgoing profit in an immensely lucrative corner of the internet where millions of visitors spend billions of dollars.
There’s no definitive data on how many Americans make their living posting adult content online. But the magnitude of revenue flowing from such websites is generally unchallenged. Pornhub alone attracted 2.3 billion visitors in January, making it the 11th-most visited site in the world, according to traffic analytics firm Similarweb. MindGeek’s sites raked in $460 million in 2018, according to plaintiff’s lawyers in the Los Angeles lawsuit, with credit card companies receiving a slice of the revenue. Rival adult website OnlyFans posted pretax profits of $433 million in the year ended Nov. 30.
“These are without question billion-dollar industries,” said Angela Jones, a sociologist at Farmingdale State College in New York and author of Camming: Money, Power, and Pleasure in the Sex Work Industry. “Not all sex workers are open about their work, and the Department of Labor doesn’t” track it. But she said the industry likely includes “millions of workers.”
But now with fewer online revenue streams, the price for some creators has been high. Gwen, who lives in Ontario, Canada, said she saw her monthly earnings on Pornhub fall by 80% to $300 after Visa parted ways with MindGeek.
First Amendment lawyers said it was the federal seizure of the website Backpage in 2018 that heightened financial platforms’ awareness of the legal threat. But more importantly, that was also the year Congress passed the “Allow States and Victims to Fight Online Sex Trafficking Act,” or FOSTA, which set the stage for litigation to come.
Read More: OnlyFans Drops Plan to Ban Porn Content Amid Creator Uproar
The law amended the Communications Decency Act (CDA) of 1996 to specifically exclude websites from its protection should they intentionally profit from a venture that promotes sex trafficking, child pornography or other non-consensual content. It also amended the federal Trafficking Victims Protection Act to expand its definition of “participation in a venture” to include “knowingly assisting, supporting, or facilitating” sex trafficking.
Professor Eric Goldman of Santa Clara University Law School in California said the legislation created new legal exposure by imposing “criminal liability based on what online services ‘ know’ about third-party content.” Industry advocates contend the law is vague and overbroad, and as a result prompted more companies to move away from adult content. They cited Craigslist shutting down its “Personals” section, adult performers’ claims that videos have been deleted from their Google drives, and most famously, OnlyFans effort to ban adult content from its site altogether.
“Visa lent to MindGeek a much-needed tool—its payment network.”
FOSTA was also the basis for the lawsuit filed against MindGeek and Visa.
The plaintiff in that case said she was 13 when images of her were uploaded to Pornhub without her consent. The consequences for her life were catastrophic, according to court papers. She endured merciless bullying at school, depression and eventually drug addiction and homelessness, her lawyers wrote. They argued that FOSTA allows her to sue the website that hosts the video and the credit card companies that process its transactions.
Visa called that reading of the law an “unprecedented and expansive” interpretation that “would upend the electronic payments industry.” But in a ruling last August, US District Judge Cormac Carney in Los Angeles held that the law does indeed allow for her claims.
“Visa lent to MindGeek a much-needed tool—its payment network—with the alleged knowledge that there was a wealth of monetized child porn on MindGeek’s websites,” Carney wrote. “When MindGeek decides to monetize child porn, and Visa decides to continue to allow its payment network to be used for that goal despite knowledge of MindGeek’s monetization of child porn, it is entirely foreseeable that victims of child porn like plaintiff will suffer the harms that plaintiff alleges.” Trial in the case is scheduled for Aug. 15.
MindGeek has denied that it “knowingly allowed and monetized [child sex abuse material].” The company said it’s “extremely confident” in its updated policies and said the lawsuit is without merit. Visa’s chief executive at the time, Alfred Kelly, said the lawsuit’s allegations are “repugnant” and “in direct contradiction to Visa’s values and purpose. Visa condemns sex trafficking, sexual exploitation and child sexual abuse. It is illegal, and Visa does not permit the use of our network for illegal activity.”
Carney’s ruling sent shockwaves across the financial industry, affirming the growing legal risk associated with online pornography, said Kendra Albert, a technology lawyer at Harvard Law School’s Cyberlaw Clinic. Soon after, Visa took another step to distance itself from MindGeek and stopped processing payments to its advertising arm. Ads represented about 50% of the company’s total revenue, according to court papers.
“Visa lent to MindGeek a much-needed tool—its payment network.”
Before FOSTA, claims against an online platform based on user-uploaded content would almost always be barred by Section 230 of the CDA. Now, according to Corey Silverstein, a free speech attorney in Bingham Farms, Michigan, lawsuits “can drown online platforms and cause them to ultimately censor protected speech.”
A 2021 report by the nonpartisan US Government Accountability Office cast doubt on the effectiveness of FOSTA in achieving its stated goals. But Alison Boden, executive director of the Free Speech Coalition, an adult industry trade group, said that one thing Carney’s ruling has done is turbocharge what she calls a chilling effect across the entire adult industry.
Harvard’s Albert agreed. “Even if Visa isn’t found liable in the end, this lawsuit already has and will change how credit card companies interact with adult industries,” they said. “I suspect that’s the point of the litigation in the first place.”
Michael Bowe and Lauren Tabaksblat, lawyers with the New York-based law firm Brown Rudnick, represent the plaintiff in the case. In their response to a request for comment, the attorneys said only that their “goal is not to get rid of the pornographic and commercial sex industry.”
Sydney, 35, is an online performer in Las Vegas. Previously making at least $1,000 a month, she said she now brings in less than $100 over the same period. Another content creator who calls herself Summer said they now earn around $170 a month—down from $1,200.
Echoing other online performers and industry advocates, Sydney blames a longer-term effort by conservative groups to roll back access to online sexual content.
One group, the National Center on Sexual Exploitation, or NCOSE—previously named Morality in Media—has taken credit for pushing credit card companies to cut ties with Pornhub. It has called pornography a public health crisis in its tax filings, and at its annual summit in November, urged increased pressure on financial institutions that offer payment services to adult sites. NCOSE says on its website that it is a nonpartisan and nonsectarian organization.
In an interview, NCOSE Vice President Haley McNamara said focusing on payment service providers “can be a pressure point on pornography companies to realize that now is the time to embrace common-sense safety standards instead of fighting them.” But content creators like Sydney contend larger social media sites aren’t held to the same level of scrutiny, report higher levels of abusive material than adult sites and have comparatively less stringent user-generated policies.
Read More: Visa, Mastercard Suspend Payments for Pornhub’s Ad ArmAlthough the payment landscape is littered with options, from PayPal to Venmo to CashApp, most (including those three) ban adult content-related accounts. And Mastercard and Visa, with their strict rules on such accounts, still facilitate 90% of global card payments (outside China). To process transactions, a business needs a merchant account from a sponsor—like a bank in the Visa and Mastercard network. When Visa and Mastercard prohibit transactions relating to specific products or services, payment providers using their networks must abide by their rules.
As a result, adult content creators are forced to work with companies that specialize in “high-risk” accounts—and charge a premium. Industry leader CCBill charges as much as 14.5% to process credit card transactions, on top of other fees, citing fraud monitoring; more than triple what lower risk businesses pay. Adult content is also considered high-risk due to a high percentage of charge disputes. American Express stopped processing sex-related transactions in 2000, citing the frequency of chargebacks.
Moreover, some content creators have reported an uptick in content restrictions on the websites they rely on. According to a survey of 117 adult content workers by Valerie Webber, board chair of adult performer health nonprofit Performer Availability Screening Service, 90% of respondents said they experienced problems with their web accounts, such as having content removed or payments interrupted.
The fallout has also intensified banking discrimination, content creators said. They have frequently alleged that financial institutions have frozen or closed their accounts without warning, and denied them business accounts or loans—claims at least one bank has denied.
In 2019, the Center for LGBTQ Economic Advancement & Research conducted a national survey of more than 60 adult content workers. It found that almost half of respondents said they had their accounts closed or denied by national banks. Almost one third said they were told their account had been closed for a violation of the company’s terms and conditions of service.
“It’s occupational discrimination,” said Alana Evans, 46, the president of the Adult Performance Artists’ Guild in San Diego. “If you don’t have access to banks, you can’t build credit. You can’t invest. It’s harder to get a lease or insurance. At any moment, we can lose access to everything.”
(Updates to add group’s website description in the 26th paragraph.)
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