[moneylaundering]

Your assertion regarding adult CNP risk is incorrect, they do in fact have much higher levels of fraud and chargebacks. The card networks came down on this category because of chargebacks, not because porn is bad.

I would also point out Adult CNP is far from the only category to get this treatment, but they are one of the only high risk categories that have four major banks more than happy to take their business. Travel sites, dating sites, and other high risk CNP merchants don’t have the same benefit.

The techniques described in this article are exactly why issuers block transactions. Merchants are trying to force transactions that are likely to be charged back by engaging in increasingly elaborate, and likely illegal, schemes.

If you’re operating a legitimate adult CNP site, there are plenty of options available to you and the adult-focused processors will hold your hand through rejecting sketchy charges even if it means lower up front revenues.

I have seen bad actors open up fake porn sites to obtain processing for their illegal activities because adult processing for legitimate sites is that available.

Edit:typos

[turnitoff]

Exactly this. Adult and high risk in general are an absolute quagmire, and all actors are trying to "outcompete" with one another, making the situation worse and worse.

Risk from transactions: stolen credit cards get default checked on adult sites (digital good delivery instantly verifies if the card is still useable).

Bad faith merchants. This goes from outright scams to the still widely used practice of "card banging", when they tack on added services or hit you with a huge fee after your free trial ends (which is not presented to the customer).

Affiliates screwing sites, sites screwing affiliates.

Billing support building more and more barriers for customers to get a hold of them or to cancel subscriptions.

And then let's not even get into the industry's backbone, content producers...

[stickfigure]

This analysis is still missing something essential.

"Adult merchants are more likely to have chargebacks" is akin to saying "Blacks are more likely to commit violent crimes". In terms of overall statistics, it's factually true, but there's still something reprehensible about judging individuals this way.

When I was at kink.com (10 years ago), our chargeback rate was tiny - lower than most online businesses, and nowhere near yellow flag territory. Yet despite our long history of good citizenship, we were still lumped into the high-risk category. Visa rules only allow banks to process a certain percentage of their volume as "high-risk", so getting merchant accounts which could handle our payment volume was a major challenge.

We have the tools to judge individuals and businesses by actions, not as members of arbitrary groups. Sure some businesses may deserve some initial extra scrutiny, but at some point your history should speak for itself.

[moneylaundering]

I think your complaint is fair regarding being lumped in despite a history of good citizenship, and I agree and add that the card networks were definitely a bit thoughtless during the adult crackdown in 2002. They have since offloaded most of this risk management process to specialty processors that do take good citizenship into account, rare as it is in Adult CNP. All high-risk means now is a couple thousand dollar startup fee and quicker turnaround through chargeback/fraud remediation programs.

Also, banks aren’t limited by anyone to a certain percentage of high risk merchant accounts currently, I am not sure if they had that limitation 10 years ago. There are certain banks, that I have interviewed extensively for my cases, that almost exclusively process cards for high-risk accounts.

[forapurpose]

African-Americans and the discrimination against them are not at all comparable to to pornographers and their problems getting payments processed. These are entirely different things with very different causes and with consequences that are orders of magnitude apart.

[asobalife]

African American here. The comparison is actually pretty apt. Deliberate, systemic economic barriers put up against those seeking to do legitimate business due to blanket group policy (see banks like Wells Fargo who are STILL doing redlining and race-based credit rationing today) actually encourages illegal activity for people trying to make a living. And lets not forget the sex workers who are creating the content sold by porn sites. Law after law pushed by both conservatives and "progressives" that criminalize even their responsible activities, make it difficult for them to bank, and making them even more vulnerable to bad actors.

The consequences are actually more or less the same - sex workers have much higher rates of mental health issues, victimization to violence, and lower life expectancy. Pretty much the same types of problems faced by (esp low income) black Americans. For largely the same structural economic reasons.

[stevenicr]

I'd like to add that some of these issues stem from the early internet porn days, when chargebacks were due in part to easy fraud by individuals looking for free porn with a phone call (to credit company), and those who paid for porn without thinking about explaining the charge to significant others who would later see the info on a bill (leading to a call to bank to swear they did not go to such a site).

Some of the statistics of these problems stem from haxor forums and like making stolen cc's available and them needed a quick and cheap way to confirm the cards are still valid, seeking a site offering a $1.99 trial to test a card, adult sites were some of the first to make those available.

I read a story couple years ago saying the pizza delivery places in New York (I think) were getting abused by similar carder testers sending pizzas around town for the same reason.

There was a time ( 14 years ago maybe?) when a good chunk of adult sites started adding auto checked addons for additional sites to sign up for, knowing that the purchaser was likely not going to understand they were being opted into additional site sign ups, with more auto billing for higher prices after a trial period, with another set of hurdles to find the cancel options for said addon sites.

- "We have the tools to judge individuals and businesses by actions, not as members of arbitrary groups."

I do think it's easier these days to determine that a solo cam girl is not engaging in the kind of shady practices that warrant the extra fees to start processing, higher yearly fees, and higher percentages.

However it appears that companies are more concerned about price gouging the few adult sites that are left rather than make reasonable options available to smaller start ups that would avoid the bad behavior that gave the blanket industry a bad name to begin with.

There has been some discussion that pressure from certain groups within the federal administrations have made some banks not handle the monies at all, and others only take the risk of whatever publicity if it makes them enough extra money to warrant the transactions.

Although my senator writes me to say there is no evidence that operation chokepoint is forcing private money handlers to change how they do business with various small businesses, I think there is enough writing on the wall to see that a little pressure here and there is making things difficult on many legitimate and legal businesses.

Given how difficult it is to do business online without visa/mc acceptance, I think it's a terrible thing to be used to encourage or discourage any kind of information sharing.

It would be nice to see Stripe and others accept adult related processing.

It would be nice to have legal protections instead of back room threats for the opposite.

Certainly the companies put in clauses that say if you get a huge amount of chargebacks at some later time we can choose to make you pay the extra 1500 or $2500 or whatever it is that higher risk accounts require, and if you turn off the software that helps eliminate some of the "not quite sure these are legit card holders" or whatever the different places call fraud checking these days, then you pay a higher rate or whatever.

I find the whole situation discriminatory, and predatory.

It makes it harder for mom and pop shops, and keeps the bigger companies in positions of power to control what the smaller publishers can choose to fund and share.

[phyzome]

Does CNP mean https://en.wikipedia.org/wiki/Card_not_present_transaction ?

[Bluestrike2]

Yes.

[oliwarner]

> they do in fact have much higher levels of fraud and chargebacks

Sorry, but [citation needed]. I don't agree with your assertion. I've seen horrible chargeback rates in apps and non-adult VoD. As high as 4.something percent at one point for one developer. The problem: kids. The lack of control over the payment process was killing him.

And that's the thing, it's not 1999 any more. You can improve chargeback rates by collecting more data, forcing 3DS, forcing AVS, SMS verification, doing statement charge verification (old school), fingerprinting every authenticated transaction. If my business and my processor's continued business depends on it, I can get beyond reasonable doubt and prove it's you making a transaction. That means a lot more drop-off (AVS alone can be 5%) but chargebacks past that are either your fault or stupidly simple to refute with evidence.

But many processors are still just unwilling.

The only way things become more reasonable is that we stop forcing otherwise legitimate adult content sites into the arms of companies that coast along on decades-old tech, making the good actors pay to offset the bad actors' actions.

Until then, when we can have mainstream processors allay risk fairly, putting a spur-of-the-moment sub-$1 micro-transaction through isn't viable and that's where porn's going to explode.