Porn News

Memberships of Expire June 27

Porn Valley- This month is going to be a big pain in the harness for The company that processes its credit card payments is pulling out of the adult online business, leaving the site to scramble for alternative ways to accept money.

Under the worst-case scenario, the memberships of patrons will expire on June 27, and they’ll all have to sign up again. This is not exactly the kind of torment its customers are looking for.

“It will be a significant revenue hit for us. We’re not big enough to deal with this easily,” said chief executive officer Brooks Talley, who expects many users will get frustrated or lose trust in the site, which calls itself “the world’s largest BDSM community.”

Talley found plenty of sympathy among other porn purveyors who gathered at the annual Cybernet Expo in San Diego. In between seminars about business plans and splash screens, dozens of mom-and-pop-style webmasters were fretting about the billing problems plaguing their industry.

While no one expects the sites to take down their XXX Live Girls and go home, operators don’t like making it hard for customers to get immediate access to dirty pictures. A credit card embargo “definitely would have a major impact,” said “Hammer,” owner of Porn Site Pros.

The first big blow came last year, when PayPal decided to stop helping adult sites do business, leaving customers without easy ways to pay for access through checking accounts. Then, last month, major credit-processing company Cardservice International told clients that it would stop supporting the industry as of late June. Now, webmasters worry that Visa will follow the lead of American Express, which left the business in 2000.

It’s not clear why Cardservice International, which claims to process more than $12 billion in credit payments a year, will no longer work with online adult businesses. In a brief statement provided to Wired News, the California-based company said: “We don’t believe there is enough benefit from this type of business for our shareholders and employees in the long run.”

Neither the statement nor the company’s cancellation letter to — “Cardservice … has determined not to continue operating in certain segments of this (online) industry” — referred to the adult industry by name.

While it’s possible that Cardservice International is leery of adult material for moral reasons, plenty of mainstream companies, from AOL Time Warner to General Motors, have made a bundle from smut without attracting much controversy. As journalists have documented, hotel chains alone bring in millions each year from pay-per-view porn.

A more likely scenario is that companies in the credit business are leery of the financial risk of supporting online adult sites.

On the positive side, the “fairly wild and lawless” early days of online porn have faded into history since the last 1990s, said Quentin Boyer, head of public relations at, which pays websites to direct traffic to its adult content.

“There’s been a slow but steady progression toward professionalism.”

But there are still hiccups on the fraud front. Ironically, it seems that the customers, not the site owners, have become the leaders when it comes to ripping people off. Porn sites must fight an eternal battle against subscribers who engage in “friendly fraud” by spawning “chargebacks,” Boyer said. They pay to look at dirty pictures or video and then run to their credit card company claiming they never authorized the charges. (The practice is also known as the “gak factor” because of the word husbands utter when their wives ask about their credit card bills.)

“We’re the naughty adult industry,” Boyer said. “Visa is never going to side with us, no matter how much evidence we have that the customer is full of it.”

Last year, Visa announced that it would cut off individual online porn sites if chargebacks amounted to more than 1 percent of their proceeds. The previous limit was 2.5 percent. Visa declined to respond to requests for comment or clarification of whether the new chargeback rule applies to a wider range of businesses.

While MasterCard and Discover also continue to support online porn sites, Visa is generating the most heat at Cybernet Expo. “They’ve labeled us as high-risk and a high-fraud industry,” complained Boyer. It didn’t help that Visa imposed a $750 fee on some online porn sites in 2003.

Porn sites will certainly survive without the support of Visa and company. While it’s notoriously difficult to figure out the size of the online porn industry, some observers estimate it sucks in billions of dollars a year, and the Internet company Websense reported in April that it has nearly 1.6 million adult sites in its database.

Considering those numbers, no one should be surprised that entrepreneurs are already trying to fill any possible holes on the payment front. Smut seekers routinely charge fees to their debit cards and phone bills in credit-card-phobic areas of Europe and Asia, and those billing systems may become more popular in the United States.

But those fixes await in the future. For now, hassles over billing and suddenly lapsed memberships certainly won’t do anything to boost the popularity of specific sites. “There is a certain sense of urgency to what these merchants are selling,” said Scott Rabinowitz, president of Traffic Dude, which provides services to porn webmasters.

In other words, the smut site that hesitates is lost.



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