Friday - May 02, 2003
They Who Have The Gold Make The Rules

Well to say I am overdue for an update is an understatement. To be honest I have been dreading this update for many reasons and, so, it's probably going to be a long one.

First and foremost, I was not only wrong about the PayPal thing being a hoax, but I was SPECTACULARLY wrong. This was punctuated by a phone call I got from a fellow named Troy who works for PayPal. Not only is PayPal going to be denying all adult business sales, but in the case of audio text, vidcam, any adult subscription services we didn't even have to the original May 13th deadline. In fact, I had 48 hours from the time I was notified by Troy to remove all PayPal payments from my site in exchange for adult services.

The claim being that they never gave "permission" for these types of services to be authorized via PayPal and, as such, were out of compliance with Visa/MC and were paying hefty fees.

Oh Joy.

Troy's claim is that PayPal isn't actually happy to be forced into this, but that it is the result of a mandatory audit required by Visa/MC. Troy spoke with me pretty candidly regarding the fact that he was not happy about this in anyway, and that he understood how crushing this was to independent phone sex and webcam working girls. Frankly, I didn't think Troy had a clue, but at least his heart was in the right place.

Oh, and if you think you're going to be able to fly under the radar, according to Troy they are doing a system-wide site-by-site audit. So if they haven't gotten to you yet…they will. I urge all phone sluts to stop using PayPal immediately and look for alternative billing providers. If you think you're going to get by on the sly, you're kidding yourself.

If PayPal has any kind of proof that you are using the system for these purposes (or if they even suspect you are) they have the right to freeze your account, seize any funds that are suspect, and access fees. If you want proof of some unpleasant horror stories, run a Google search and find out some hard facts about the lack of your rights in their system.

If you're looking for alt billing solutions, make sure you call UP FRONT and ask what their policies are. Yahoo has already frozen one person's account that I know of, and they have not responded to emails in 48 hours. IBill and CCBill do not permit audio text services, according to the account representatives I spoke with. Other alt. billing providers might allow adult services, but not audio text services. So, get all the questions asked up front. If you find one you're willing to share, please let me know and I'll post it here for other girls to learn of. So far, although, several people have offered alternate suggestions, not one has confirmed they're using an alternate billing provider with positive results.

Not to get off on a rant here, but I would just like to express my frustration with this from an independent sex worker perspective. None of the services I've worked for have ever had a high charge back rate. I've never had a single charge back. And NONE of the independent operators I know have ever had a PayPal charge back.

Regardless, Visa claims that they access such high fees on the sex industry is because of the high charge back rates. Having consulted for credit card companies in the past, let me tell you how this works.

Like a bank, credit cards make their money on interest rates and services fees. So, let's go over a scenario here.

1. Bob calls Phone Sex Service A. He enjoys three longish calls for a total of $200.
2. Bob gets his bill and month later and one of the following happens:
      a. Bob doesn't recognize the name the phone sex service bills under.
      b. Bob didn't keep track of his time and had no idea he'd run up such a large  
          amount in phone sex.
      c. Bob doesn't feel like paying the $200 and has heard you can get away with 
          murder with adult services and credit cards.
3. Bob calls his credit card company and says he wants to dispute the three 
4. Phone Sex Service A has the $200 worth of charges reversed PLUS gets 
    accessed $15 to $30 per disputed charge. Let's call it $20 per 
    transaction for a total of $60.

So, not only is the credit card company NOT down any money -- they're up the $60 in service fees PLUS any interest that was garnered during the process.

Now, at this point, Phone Sex Service A doesn't have a lot, if any, recourse directly through the credit card company. You see, the credit card company falls back on the theory that someone could have pilfered Bob's credit card, broken into his house, and placed the call because it wasn't a point-of-sale purchase. It doesn't matter if the company has phone records, work numbers, or additional information. The credit card company's only recourse is to deal directly with the customer -- which can get ugly. But the fact is that refusing to pay for legitimate charges is, in fact, fraud. However, once the company gets a hold of Bob (or has a nice police officer call Bob to explain to him what fraud investigations entail) Bob might very well call the credit card company and say "oh yeah, I recognize this, I'll pay for it."

However the service charges are not refunded. So the credit card company is STILL up the $60. (Bob is not charged a fee for disputing charges because this is something his annual membership fee entitles him to. There is no negative repercussion for Bob in this. Worst case scenario, he delays paying his bill for a few extra weeks.)

In fact, the only time the credit card company can possibly be out money is if a company completely folds before the credit card company can recover monies. Which means whoever set up the merchant account didn't go through a very good verification process.

So, the reasoning that credit card companies NEED to access extra charges to companies in "high risk" industries, is completely bogus. What they are doing in penalizing the adult industry for their own risk-taking and exploiting the fact that the adult industry doesn't have a good media lobbying position. It's not like a bunch of phone sluts can go on Larry King Live and win the nation over to the unfair policies of credit card companies.

So, those that can afford it pay ridiculous fees for their merchant accounts and the rest of us use PayPal. Until now.

I am not longer accepting payments of ANY KIND via PayPal and I have closed the Phone Slut Diary's PayPal account. Please do not attempt to send tips, gratuities, or site donations. Although I do appreciate the thought.

Also, I apologize to my regulars who had so much difficulty getting in touch with me around the middle of April. I had an impromptu birthday holiday with friends.

Ah well, I suppose my credit card rant is all there is for now. Isn't it sexy when a girl bitches about alternate billing processors? Yeah baby.


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