Chase Bank to Close Accounts of People involved in Porn

JPMorgan Chase & Co. is a multinational banking and financial services company based in the United States, where it is also the largest bank. Over the past two weeks, they’ve been sending letters to a number of American adult performers telling them that the bank is closing down their accounts. On April 8, Los Angeles-based performer and director Keiran Lee tweeted that Chase was closing his business account and soon a number of other porn performers followed, including megastars like Stormy Daniels, Teagan Presley and Bonnie Rotten.

These letters regarding the closures said, in part: “We recently reviewed your account and determined that we will be closing it on May 11, 2014. Please accept our apologies for the inconvenience. […] You may close your account before the date we’ve provided. Your account agreement says that either of us may close your account at any time, without notice and without reason.”

Presley’s husband’s personal account is being closed along with hers and their two business accounts. When he called Chase for more information, he was told that the bank deems porn to be “too close to prostitution.” Personal accounts, he was told, will be closed on Sunday, May 11, while business accounts will be given until Saturday, June 14, before being closed.

“When I asked why my account had been closed — because I’ve never once, ever, deposited an adult check into my personal account, ever — they came back and said it was because I was married to an ‘infamous,’ was the word they used, ‘adult star,'” he told AVN. When Presley went to Bank of America to open a new account there, she was turned away. The couple finally went with Wells Fargo.

This isn’t the first time that financial institutions have taken a position against the adult industry like this. Payment processors refuse to service adult performers, making it almost impossible for independent studios and performers to operate, no matter how good their consumer satisfaction is. Crowdfunding sites frequently bar projects from creators of adult media and even those sites that claim to be open to all have been forced to cancel campaigns due to their payment processors’ “morality clauses.” And it has always been difficult for sex toy start-ups to get small business loans.

Last year, Chanel Preston, another adult performer, saw her business account closed down at City National Bank in L.A. She told CNBC that a bank manager explained that the bank had taken a look at her site and become concerned about the nature of its content. Earlier, Chase had refused to refinance the mortgage of Marc L. Greenberg, the founder of the softcore porn studio MRG Entertainment, on “moral grounds,” even though Greenberg had long since sold the studio.

More than a few times, financial institutions have gone beyond denying services for things directly related to pornography like this. When camgirl Maggie Mayhem asked people to donate funding in 2010 so she could go do relief work in Haiti, PayPal told her to get lost. A number of sex educators, including Sabrina Morgan, have had trouble with payment processors as well — for selling things such as counseling.

A similar misfire occurred last month when Chase Paymentech, one of the largest payment processing systems available, determined that Lovability, a safe-sex education website selling condoms, violated its “morality clause.” Following a Change.org petition with over 4,700 signatures and a bit of mainstream media scrutiny, the processing arm of Chase finally apologized and agreed to do business with Lovability — but this kind of outcome is the exception, not the rule.

“Throughout my practice I’ve had clients that have had their bank accounts closed, once the bank recognizes or determines that they’re in the adult industry,” adult industry attorney Michael Fattorosi told XBIZ. “What I’ve never seen is a bank taking a position and sending out mass letters.”

The Huffington Post’s senior political economy reporter, Zach Carter, has a theory about why this is happening. He thinks this is the work of the Third Party Payment Processors Association (TPPPA), a new government lobbying group that has been fighting the government’s effort to cut down on fraud, identity theft and money laundering by scrutinizing banks and third party processors who work with people in businesses that occupy legal gray areas.

The Obama Administration’s Operation Choke Point, as it is called, has been focusing on “high-risk” activities and industries that have high rates of chargebacks — the return of funds to a consumer. To date, the Department of Justice has issued 50 subpoenas to banks and payment processors as part of Choke Point, creating a very risk-averse environment among financial institutions.

Republicans have come swinging for the rights of businesses, calling Choke Point’s crackdown on fraud an act of aggression against payday lenders and small business. Others on the right have also mobilized against Choke Point, claiming President Obama intends to use financial institutions to do away with the American right to easily buy weapons and ammunition. Carter believes that the TPPPA is looking for bipartisan support now by encouraging payment processors to put the heat on things that will mobilize the American left. He writes that a Democratic aide in the House of Representatives told him that during talks with the TPPPA, the lobbying group told Democrats, “How would you like it if we started cutting off things liberals like, like birth control?”

The TPPPA has no single political affiliation. Its president, Marsha Jones, told the Huffington Post, “They can assign reputation risk based on their moral judgements, but everybody has different moral judgments. That’s the danger of it. One administration is polarized one way and the other another way. And we must remove morality out of payments because it’s dangerous. We support the fight against fraud because it only hurts the processors, too, but the tactics the government is using right now is like bombing a neighborhood to catch a drug dealer.”

It’s an interesting theory, except there is no way of knowing whether Chase singled out Lovability as a political statement. Most likely, the safe-sex seller got tangled up in a decision to do away with as many adult accounts as possible, which are deemed to be “high-risk” by banks in the same way they are denied by payment processors. Nothing personal, just business — and porn, like sex educators, is caught in the cross hairs. But unlike sex educators, the adult industry will not be able to count on anyone outside of it to lobby for its workers.

MORE STORIES ABOUT DISCRIMMINATION:
Sex Sells, But Good Luck Cashing In by AV Flox on March 06, 2014
How WePay Failed Eden Alexander by Kitty Striker on May 17, 2014

Header image by Sasha Kimel.