* PayPal targets e-books with themes of rape, bestiality,
* PayPal says credit card companies, banks partly behind
* Publishing, free-speech groups ask PayPal to change policy
By Alistair Barr
SAN FRANCISCO, March 7 PayPal, the online
payments arm of eBay Inc, has sparked a furor in the
publishing world by asking some e-book distributors to ban books
that contain "obscene" themes including rape, bestiality or
PayPal sent an email on Feb 18 to Mark Coker, founder of
e-book publisher and distributor Smashwords, saying it would
"limit" the company's PayPal account unless Smashwords removed
from its website e-books "containing themes of rape, incest,
beastiality and underage subjects."
PayPal sent similar warnings to online publishers and
booksellers including BookStrand.com and eXcessica, according to
the Electronic Frontier Foundation, a non-profit that supports
free speech, privacy and other individual rights in the digital
A PayPal spokesman confirmed that the company sent such
notifications to companies but declined to identify specific
EFF and other groups including the Authors Guild, the
American Booksellers Foundation for Free Expression and the
Association of American Publishers are planning to send a letter
to PayPal on Wednesday asking the company to reverse its policy.
PayPal "is now holding free speech hostage by clamping down
on sales of certain types of erotica," the groups said,
according to a draft of the letter sent to Reuters. "We strongly
object to PayPal functioning as an enforcer of public morality
and inhibiting the right to buy and sell constitutionally
PayPal said it was acting in part because banks and credit
card companies it works with restrict such content, according to
an email PayPal sent to Smashwords on Feb. 24. Reuters obtained
copies of the emails.
"Our banking partners and credit card associations have
taken a very strict stance on this subject matter," PayPal said
in the Feb. 24 email. "Our relationships with the banking
partners are absolutely critical in order to provide the online
and mobile services we (offer) ... to our customers. Therefore,
we have to remain in compliance with their rules, which prohibit
content involving rape, bestiality or incest."
The move has caused an uproar in the publishing world, which
is concerned that banks and credit card companies may be
exerting too much control over what books can be written,
published and read.
"You're dealing with American Express, MasterCard and Visa
-- are they making these decisions?" said Albert Greco, a
book-industry expert at the business school of Fordham
University. "That seems very strange and it could well be a very
Spokespeople at American Express, MasterCard,
Visa and big card-issuing banks JPMorgan Chase,
Citigroup and Wells Fargo, did not respond to
phone calls and emails seeking comment on Wednesday.
"We've had deep concerns about financial payment providers
choosing what sorts of transactions they process," said Rainey
Reitman, activism director at the Electronic Frontier
"Speech on the Internet relies on companies that are
supposed to act neutrally," she added. "When certain chains in
this link suddenly decide to become arbiters of what people
read, that's a problem. This is now affecting individual book
A PayPal spokesman said the company allows its service to be
used for the sale of "erotic" books but added that the company
has to draw the line "on certain adult content that is extreme
or potentially illegal."
PayPal's decision is based solely on business factors, one
of which is the company's agreements with card associations and
banks, the spokesman added.
Fordham's Greco said PayPal has a right to choose what type
of transactions its payments services will support.
Still, Smashwords founder Coker said that the rise of
e-books has shifted more power in the book world to payment
processors and banks.
In the past, readers walked into a physical bookstore and
could purchase a book with cash, leaving such companies out of
"Electronic payments have become the oxygen of e-commerce
and e-books, so PayPal, banks and credit card companies have
enormous power," Coker said. "What right does a financial
institution have to censor legal content? Authors are being
caught in the middle."