For many years payment processors have dealt with both file-hosting and BitTorrent sites without asking too many questions, but last year things began to change.
Rightsholders and anti-piracy companies have been putting companies like PayPal under increasing pressure to stop processing funds for sites that have become associated with copyright-infringing activities, whether those sites operate legitimately or not.
Stirred up by people such as those behind the StopFileLockers campaign and rightsholders including IFPI and BREIN for example, slowly but surely processors have been making it more and more difficult for file-sharing related sites to do business with them.
Many sites have had their funds frozen by PayPal – in some cases tens of thousands of dollars – after the company either arbitrarily decided to cease trading with them or after sites refused to comply with PayPal’s terms and conditions.
As previously revealed, PayPal has been demanding access to the back-end of file-hosting websites to examine their customers’ files as a condition of continuing business with them. That demand went too far for file-hoster PutLocker who told us last year that as a matter of confidentiality that would never happen. As a result PayPal froze the company’s funds for 6 months.
But PayPal isn’t stopping there. According to several admins who spoke with TorrentFreak on condition of anonymity, PayPal has been freezing the accounts of private BitTorrent trackers too – and then demanding access to the sites so they can see what goes on there.
Of course, this creates problems. Private sites tend to have invitation systems so in the first instance PayPal has to be either sent an invite or have an account created for them manually. However, once PayPal gains access it is effectively game over for the site’s donation account. There are few private trackers that deal in 100% authorized content and filtering out unauthorized material as PayPal requires would make many of them pointless.
We aren’t sure of the precise numbers but sites have definitely been losing their PayPal accounts in recent months, either after refusing to comply with PayPal’s terms or failing inspections. However, we are informed that there are ways of being creative in order to keep accounts – or at least develop new ones that run in a different direction.
One admin told us that he has plans to shift away from the donation model completely and towards selling products and services to his userbase. At an inflated price (a mug for $25 or VPN for $20 per month etc) he hopes that he can generate enough profit to keep his ship afloat.
“Paraphrasing that dude in Independence Day, do you really think it costs $20,000 for a toilet seat?” he said.
Another source told us he may well run two sites. One will operate as a fully legitimate concern within PayPal’s guidelines and be set up to accept the donations. These funds will then be funneled to the second site to keep it going.
There is another way of keeping PayPal sweet too, but the method is apparently so secretive that our source refused to reveal many details. “Let’s just say if you do let the monkeys at PayPal into your site, passing doesn’t have to be hard if you do the prep work,” we were told.
But despite the creativity, others appear to be destined for no-man’s land. During the past few days TorrentBytes, one of Internet’s oldest private trackers, has announced that due to being unable to process payments it may well close down before the end of the month.
“Recent situations have put the staff team in a very hard position with handling site finances,” an announcement from TorrentBytes begins. “Problem is not lack of donations, but entirely on handling them. As of current every service provider the site has to pay for only accepts PayPal, Credit/Debit cards or direct bank wiring. Only one provider allows bitcoin.”
“Unless we can figure out some realistic and possible way to do site finances completely PayPal free, it seems like the story of TorrentBytes will end very soon after January 2013.”
At the time of writing the site is down and unreachable, possibly temporarily but possibly not. The question is, how many more will join it in 2013?