Banks Shut Down Adult Entertainment, Workers Turn to Crypto Payments

On April 6, 2018, the U.S. Department of Justice announced the seizure and shutdown of Backpage. This move was part of a 93-count indictment of seven former owners and executives, charging them with facilitating prostitution under the U.S. Travel Act.

The situation Backpage found itself in has been an example of what happens to many businesses considered “high risk”. While users of the site say what they do “is 1,000 percent legal”, they typically soon find out that their accounts have been shut down or money taken away. In fact, banks are allowed to freeze deposits or entire accounts if they believe fraud or suspicious activity is occurring. 

Even crypto payments have been unable to save these accounts. After Visa and Mastercard cut off ties from Backpage back in 2015 (as allegations grew), the site started processing payments in cryptocurrency. Just days after the end of Backpage, a series of bills when into law aimed at curbing sex trafficking.

Known as the Allow States and Victims to Fight Online Sex Trafficking Act (FOSTA) and the Stop Enabling Sex Traffickers Act (SESTA), the aim of these laws is to shut down websites that facilitate sex trafficking online by increasing liability for third-party platforms. Not all involved are happy about these new laws, however. 

Sex workers and advocates argue that, while these laws are well-intentioned and address a very real issue, the laws are vague enough that it could harm those conducting business legally. Some say this has already been the case as banks and investigators have tracked down and shut down many accounts.

“Folks had their accounts closed by either banks or fintech companies that also frequently froze the money they had in those accounts, and they had difficulties getting that back,” said Spencer Watson, Executive Director of the Center for LGBTQ Economic Advancement and Research (CLEAR).

“Some were completely unable to get that back or some had to wait weeks or more in order to have the check from the proceeds of their bank account delivered to them.”

For now, it would seem the only alternative for individuals and sites in this industry operating legally is to turn to a high risk payment processing provider that specializes in working with those in this industry. They understand the challenges the industry faces and provide the services necessary to process transactions safely.

Blair Thomas has been a music producer, bouncer, screenwriter and for over a decade has been the proud Co-Founder of eMerchantBroker, the highest rated high risk merchant account processor in the country. He has climbed in the Himalayas, survived a hurricane, and lived on a gold mine in the Yukon. He currently calls Thailand his home with a lifetime collection of his favorite books.