
The Morality Police in Your Checking Account - panarky
https://www.eff.org/deeplinks/2014/04/moral-police-your-checking-account-chase-bank-shuts-down-accounts-adult
======
EricaJoy
My first reaction to this story was outrage, followed by skepticism. The story
around Operation Choke Point (OCP) appears to have taken a year long breather
(the first story about porn stars losing their bank accounts was reported in
May 2013
[http://www.cnbc.com/id/100746445](http://www.cnbc.com/id/100746445)), only to
resurface with a WSJ article on the subject:
[http://online.wsj.com/news/articles/SB1000142405270230481090...](http://online.wsj.com/news/articles/SB10001424052702304810904579511911684102106).

The WSJ article was penned by former governor of Oklahoma and current American
Bankers Association (ABA) President, Frank Keating. The ABA is a national
trade association that represents all banks (source:
[http://www.opensecrets.org/news/2012/09/capital-eye-
opener-s...](http://www.opensecrets.org/news/2012/09/capital-eye-opener-
september-7.html)), essentially a lobbying firm for the banking industry. One
wonders why the banking industry would care enough to have the President of
their lobbying firm publish a piece about this in the WSJ. Surely a Republican
from Oklahoma cares little and less about the financial well being of porn
stars.

On the same exact day the WSJ article was published (April 24, 2014), an
article written by Jason Oxman, CEO of the Electronic Transactions Association
(another lobbying group) was published, also lambasting OCP:
[http://thehill.com/blogs/congress-blog/economy-
budget/204174...](http://thehill.com/blogs/congress-blog/economy-
budget/204174-operation-choke-point-harmful-to-flow-of-commerce)

These two articles, if you can call them that, given the authorship, are the
only source pieces at the root of the current media interest in OCP.

It's clear (to me anyhow) that the porn stars aren't the story here, they're
just the fodder to get the people in a tizzy about OCP. I'm wondering what
else is in involved in Operation Choke Point that's making the banking
industry and the payment processors call out the big guns. Whatever it is, I
imagine large sums of money are involved.

~~~
hga
Just what are you trying to say here, besides pointing out the banking
industry is making a significant propaganda effort right now?

Do you think the industry likes the Federal government using lawless means to
force them to stop serving whomever is the target _de jure_?

Is it axiomatic that banks dealing with large sums of money is bad??? (I kinda
thought that was their business....)

If this precedent is established and takes roots, where will it stop? What are
your objections to their using the soap box to try put a stop to it?

~~~
tptacek
Can I for once be the origin of a crazy conspiracy theory rather than the
annoying guy huffing and griping in the corner and killing everyone's fun?

How about this:

DOJ has launched a project that coordinates with the country's largest banks
to constrain and monitor high-fraud businesses; say, porn sites, prepaid
cards, and payday loans.

Porn doesn't have a significant lobby.

But payday loans and prepaid cards sure as hell do.

Unfortunately for those lobbies, it's unseemly to write op-eds about how the
DOJ and banks are collaborating to suppress the exploitation of poor people.

It is, however, possible to get stories placed about the government's secret
plan to create a Morality Police Force to eliminate pornography and, one
assumes, any other form of expression the government disfavors.

~~~
hga
So they're now "high-fraud" businesses, vs. "fraudulent businesses"
([https://news.ycombinator.com/item?id=7671113](https://news.ycombinator.com/item?id=7671113))?

And this must be some new meaning of the word "constrain" I wasn't previously
acquainted with. This "operation" appears to be intended to terminate these
"undesirable" businesses with extreme prejudice, and without the pesky Rule of
Law getting in the way.

~~~
tptacek
When I called payday loan companies "fraudulent", I was letting my biases
show. The more accurate way to describe them is with the phrase I used in my
latter comment: a high-fraud business, one that hosts quite a bit of fraud.

~~~
hga
So an acceptable solution is "Kill them all, God will know his own"?
([https://en.wikipedia.org/wiki/Massacre_at_B%C3%A9ziers#.22Ki...](https://en.wikipedia.org/wiki/Massacre_at_B%C3%A9ziers#.22Kill_them_all.2C_God_will_know_His_own.22))

~~~
tptacek
If you want to write an impassioned case on behalf of payday loan companies,
be my guest. _You asked a question_ : what did the OP mean when it pointed out
that this issue was being driven by op-eds from banking lobbyists? I provided
a possible answer.

~~~
hga
My impassioned case is for the Rule of Law.

Do the ends justify the means?

~~~
tptacek
Investigations and prosecutions of fraud --- OCP includes criminal
prosecutions --- are part of the rule of law. Meanwhile, banks profit directly
from fraud by collecting transaction fees. The banking lobby wants to convince
the government thank the banks will self-police, but the issue at hand is an
externality to the banks.

What I'd like to know is, why are EFF and Reason casting this as suppression
of pornography? It's the payday lenders and prepaid card scams that are
driving the lobbying effort.

~~~
hga
You know very well if the DoJ was "containing" problems through legit fraud
prosecutions nobody would be raising a huge fuss.

(ADDED: one wonder how many of these prosecutions are legit vs. "the process
is the punishment" well nigh unlimited budget DoJ vs. likely small fry.)

It's the lawless abuse of regulatory powers---e.g. why the FDIC is part of the
operation---to try to shut down entire sectors of the finance industry that
has people figuratively up in arms.

~~~
tptacek
I do not know that very well. In fact, I don't think that's true at all.

------
panarky
My local Chase branch has been calling and emailing me relentlessly, multiple
times per week for the last four weeks or so, ostensibly because required
"profile" information is missing on my business accounts.

I replied by email to ask what information they need. They won't give any
specifics, but insist that I schedule time to meet in person.

I've had the same Chase accounts for many years, and my business is pretty
mundane, so I assumed it was just overzealous cross-selling of services or
investments that I don't need.

But according to this EFF article, maybe there's more to it?

~~~
yid
Sounds like you might have been selected for their know-your-customer
compliance:
[http://en.wikipedia.org/wiki/Know_your_customer](http://en.wikipedia.org/wiki/Know_your_customer)

~~~
bjelkeman-again
I just got a letter in the post from my bank in Sweden about this. Maybe there
is a deadline somewhere, or just a coincidence.

------
saryant
Chase has been on a know-your-customer kick lately, targeting credit card
churners who manufacture spend involving linked Chase checking accounts:

[http://www.flyertalk.com/forum/chase-ultimate-
rewards/152657...](http://www.flyertalk.com/forum/chase-ultimate-
rewards/1526572-chase-closed-my-cc-account-300-000-ur-points.html)

The consensus is that heavy deposits of money orders into Chase accounts
prompted manual fraud reviews, leading to shutdowns of the entire client
relationship (credit and deposit accounts).

------
jack-r-abbit
A lot of hosting providers do not want to host adult sites. Mine told me it
was primarily because those sites are frequently subject to DDoS attacks and
they didn't want to constantly battle that. They wouldn't even allow me to
host a site that just handled the sign-up and payment processing even when
absolutely no adult content would be hosted on that site (or even my account
with them). (I ended up never pursuing my idea so it was a moot point)

Many insurance companies will not write home owners policies for people that
have a blacklisted breed of dog. When faced with insuring my home, I chose a
company that didn't mind my pit bull.

I'm not sure if I should really be outraged that a bank doesn't want to do
business with a person they see as a high risk. It might not be a 1 or 2 click
process to switch banks but it is not that hard. A Wells Fargo customer
support person was rude to me one time and I had a new account at a new bank
by week's end.

~~~
samstave
We need empirical definition of what constitutes "high risk" in every single
situation where that measure is a factor. It must be absolutely transparent
else it should be deemed that the claimer of high risk is actually a money
laundering vector, or arbitrary service denier.

Further, we need a war-on-bankers.

Bank simple and standard treasury are attempts at pulling the wool over people
via "startup hype" whereby they still back themselves with traditional banks.

Square and stripe are simply the "new mastercard"

There is no actual real innovative movement in finance.

Bitcoin is going to be attacked, co-opted and robbed. It is also being
gamed/cornered by people like the Winklevii...

What we need is a crytpo-credit system which is abstracted and anonymous to
banking-of-traditional-fiat where a user can build a crypto-credit score from
which real currency transactions can emerge/be borrowed.

The current system is an oppressive, exclusive system designed to be
exceedingly top heavy.

~~~
nikcub
> We need empirical definition of what constitutes "high risk" is

Average CC fraud rate is 0.04% of credit card transactions. A 'high' rate
would be greater than 0.1%.

The site categories that are listed frequently have fraud rates of 1% or
higher, they are _way_ above average. Webcam site fraud rates are _at least_
1%, if you counted attempts you could multiply that by an order of magnitude.

Further, what isn't fraud on the webcam sites is often money laundering. As
much as I hate to admit it, but the DOJ are right to be wary of them (not that
I agree with shutting down sites or porn star bank accounts carte blanche).

Webcamming is a _very_ easy way to launder money, and it happens. A lot.

------
wmf
Bank neutrality anyone? It seems like we could make banks "financial common
carriers" so that they aren't liable for customers' illegal behavior as long
as the banks themselves follow the law.

~~~
noarchy
Governments might like the ability to offload responsibility for enforcement
(and therefore, cost) to the banks themselves.

------
higherpurpose
Something that just came up to me: why is making porn movies for money legal,
but prostitution is illegal? It seems to me that either both should be illegal
or both should be legal. The current situation seems pretty contradictory. At
the end of the day it's "sex for money" in both cases.

~~~
betterunix
"Something that just came up to me: why is making porn movies for money legal,
but prostitution is illegal?"

The law is not a strictly logical system (this is usually a good thing,
despite the common negative perceptions). Pornography was once illegal; then
the interpretation of the law changed so that it would be considered
"protected speech," unless it is being displayed in certain contexts.
Prostitution is illegal in most of the USA, except for certain forms which are
not illegal (e.g. it may not be illegal to have sex with your boss in exchange
for a promotion).

------
seacious
I think this is where crypto currencies really shine. They remove the
gatekeeper for financial services. All their other benefits (and risks) are
less significant.

~~~
gte910h
Bitcoin in particular however is not anonymous. It's exceedingly public.

~~~
virtue3
and forever put into the block chain.

A _lot_ of people don't realize this.

~~~
Karunamon
"Public" is one thing, associating a name to a hash is something else
entirely. Keeping in mind that a user can have unlimited wallets and send
coins between them on the fly...

~~~
gte910h
You can certainly try to keep a secret for a very long time. But the secret
nature of bitcoin is _waaaaay_ exaggerated. If you use it, you can be traced
often."I have 300 wallets" is possible, but not convienent

~~~
Karunamon
Basic bitcoin security is new wallets for each transaction. It is still a very
hard problem just looking at the block chain that if this hash sends coins to
that hash who the owner of the recieving wallet is. Is it the same person
filling a new wallet or a transaction?

------
jluxenberg
If you have a Chase account you can afford to walk away from, send them a
nastygram threatening to take your business elsewhere.

------
hga
Earlier item using a _Reason_ article, much more suspicious this is a new
action of Operation Choke Point, and listing other areas possibly under
attack:
[https://news.ycombinator.com/item?id=7667309](https://news.ycombinator.com/item?id=7667309)

------
xupybd
One possibility here is that many would pay for porn with stolen credit cards.
Thus making business that sell porn high risk to banks?

That said from the other comments on here it does sound like there could be
more to it.

------
ChuckMcM
While its important to publicly shame institutions that do this sort of thing,
its less unclear how widespread it is.

~~~
pmorici
It's the US government forcing them to do this. how will shaming the bank
change the fact that they are probably obligated to do what the government
tells them to?

~~~
ChuckMcM
I don't see anywhere that this was done at the behest of the government. While
the government has shut down accounts in all banks involved in criminal
activities, adult entertainment is not a criminal activity. And the article it
is only Chase bank, not all banks.

Do you have additional information that the EFF hasn't included? I'd love a
reference to that. There is some more complex issues in the Bay area with
cannibis retailers since it is "legal" by state law and "illegal" by federal
law to sell pot. That puts the banks in a tricky place. So far though they
have not pulled accounts for licensed dispensaries.

~~~
pmorici
This Washington Post article describes the situation in more detail...

[http://www.washingtonpost.com/blogs/wonkblog/wp/2014/04/16/o...](http://www.washingtonpost.com/blogs/wonkblog/wp/2014/04/16/operation-
choke-point-the-battle-over-financial-data-between-the-government-and-banks/)

Essentially the government is threatening legal action against the banks
unless they shut accounts down of businesses and individuals associated with
those businesses that the government doesn't like. Chase is the biggest bank
out there so it isn't surprising that the government probably targeted them
fist and they also have the largest number of potential jilted customers to
complain. Even though we are only hearing about 2 or 3 cases here there are
certainly many more who aren't making a stink in the media.

Also: [http://www.theguardian.com/money/2014/mar/23/operation-
choke...](http://www.theguardian.com/money/2014/mar/23/operation-choke-point-
payday-lenders-issa-banks)

~~~
ChuckMcM
Thanks for the link. I'm surprised the EFF wasn't actually specifically
calling out OCP rather than the specific instance of one industry at one bank.

Interesting article on the troubles in Colorado for 'scorned' businesses
trying to get banking services. [1]

[1] [http://www.banklawyersblog.com/3_bank_lawyers/2014/04/the-
ma...](http://www.banklawyersblog.com/3_bank_lawyers/2014/04/the-marijuana-
banking-conundrum-in-colorado-may-be-driving-banks-to-distraction-but-its-
opening-up-the-funding-business-to.html)

------
sirdogealot
How did they determine who was a porn actor and who was not?

------
daemin
By all libertarian interpretations Chase bank should be allowed to do - or to
not do - business with whomever it wants. For example if it wants not to deal
with people/businesses in the porn industry, or even people of a certain skin
colour, it shouldn't have to. Whether this is good for businesses, or even if
it is a moral or right thing to do, is yet to be determined.

