Visa isn’t showing backbone when it comes to Backpage
Did Visa CEO Charles Scharf lose a bet to Tom Dart?
Why else would the leader of the San Francisco payments giant unconditionally capitulate to the demands of a sheriff whose jurisdiction extends no farther than Cook County, Ill.?
Last month, Dart successfully pressured Visa, along with MasterCard and American Express, to stop processing payments connected to Backpage.com because the website refused to stop running “adult services” ads that Dart equates with sex trafficking.
If all this sounds familiar, it should. Dart went after a similar type of site, Craigslist in San Francisco, a few years ago for the same reason and lost in court. And he’s likely to lose again: A federal judge granted Backpage’s request for a temporary restraining order last month.
“Backpage has established a more-than-negligible likelihood of success on the merits of its claim that Dart’s informal lobbying of the credit card companies violated the First Amendment by imposing an informal prior restraint on the advertisements hosted by Backpage.com,” U.S. District Judge John Tharp wrote in his ruling.
Dart is certainly this case’s star attraction. But the disturbing behavior comes from Visa, which used its financial dominance to help Dart censor and effectively shut down a lawful business.
“I find it very alarming that a local county sheriff can dictate what is or is not permissible on the Internet globally,” Liz McDougall, Backpage’s general counsel, said in an interview. New York law firm Paul Hastings also represents Backpage.
Silicon Valley — and indeed all e-commerce companies — should pay attention to Backpage, as this case demonstrates the disproportionate power Visa can wield over the Internet to serve the govern-
This case illustrates the disproportionate power Visa can wield over the Internet.
ment.
What makes Visa’s actions even more headscratching is that even Dart knew he had no real leverage on the company, which generated $12 billion in revenue last year. Visa could have easily just ignored him.
“When the merits of this case are resolved, Backpage will have to contend with the sheriff ’s candid, and somewhat surprising, admission on the record that there is no investigatory or prosecutorial action within his jurisdiction that he could take vis-àvis the credit card companies,” Judge Tharp wrote.
Visa did not respond to multiple requests for comment. In a recent statement to USA Today, spokesman John Earnhardt noted that the company has often cooperated with law enforcement officials to “safeguard the integrity of the payment system.”
“Visa’s rules prohibit our network from being used for illegal activity,” he said.
Illegal activity? If that was Visa’s standard, the company better stop doing business with every media outlet in the country that sells classified advertising. What about dating services or porn sites? I’m sure nothing bad ever happens there.
A website called 18 and Abused, full of hardcore pictures and videos of women who appear to be teenagers, gladly accepts Visa cards.
Are some adult ads fronts for sex trafficking? Sure. But adult content makes up less than 10 percent of Backpage’s total content. Shutting down an entire company seems like a grossly disproportionate response to the alleged criminal activity.
I asked McDougall about the reasons Visa gave Backpage to justify its decision.
“It’s something I can’t discuss right now,” she said cryptically.
McDougall has unique expertise. She served as outside counsel to Craigslist when Dart and state attorneys general pressured the company in 2010 to eliminate its “adult services” section. Though Craigslist ultimately prevailed in court, the company eventually dropped the content.
McDougall said she could not comment on Craigslist’s decision. But she seemed unhappy with it.
When Backpage wanted to hire her, McDougall said she would take the job only if the company promised not to succumb to censorship.
Remember WikiLeaks? In 2013, Visa, along with MasterCard, PayPal and Western Union, blocked donations to the website after the activist organization began publishing classified U.S. diplomatic cables. But at least with WikiLeaks, the feds pressured Visa in the name of national security.
With Backpage, we’re talking about a county sheriff and escort ads.
In any case, “payment processors and banks shouldn’t be in the position of deciding what type of online content is criminal or enforcing morality for the rest of society,” Rainey Reitman, director of the activism team at the Electronic Frontier Foundation, wrote in a recent blog post about Backpage.
“For one thing, their businesses haven’t been designed to analyze the legal and societal issues at play in various forms of online expression,” she said. “That’s why courts, not companies, should determine what type of speech is legal on the Internet.”
Even if Visa restores services to Backpage, the website is aware that its fate ultimately rests on the whims of a multibillion-dollar giant that scares easily.
“They can still do anything they want,” McDougall said. “What’s next? It’s terrifying. I’m not sure how we got to a situation where there is such a monopoly that can censor speech and e-commerce.”
Dart went after a similar type of site, Craigslist in San Francisco, a few years ago for the same reason and lost in court. And he’s likely to lose again.