To the general public, paying for adult products like toys and pornography might seem like a simple business transaction. Unfortunately, getting the financial services necessary for operating a sex-related business is anything but easy.
When I started my sex-toy store, I called six payment-processing companies before I found one that would work with an adult business (there were only about eight operating in Canada at the time). Many of my colleagues in the adult industry have also been turned down for processing and basic business bank accounts.
I have been told that sex shops are considered a high-risk category, but it has never been clear what this means. Recently, however, I learned some things about a covert operation in the US that has helped me put some of the pieces together. The Obama administration started a program called Operation Choke Point which targets businesses that may be associated with illegal activity, such as arms dealing or organized crime. The goal is to choke them out by crippling their access to money. Now, this would be a great idea if all of the businesses affected were actually involved in crime, but it’s not that precise.
Instead of targeting specific businesses suspected of illegal activity, Choke Point tells the banks which industries they are concerned about—making it clear they will monitor these financial records closely. As banks can be held responsible for the criminal activity of their service users if it can be proven they were aware of it, or should have been suspicious but failed to investigate, the banks therefore draw a large circle around anything that could be remotely related to the named industries and refuse service.
Although we don’t have an Operation Choke Point in Canada, a similar dynamic happens here. Some banks are afraid of perceived extra scrutiny and liability, so they simply won’t work with any business they think might pose a risk. Simply because it has something to do with sex, some banks conclude that completely legal retail operations—like sex-toy stores—are too risky to support.
This may seem like an issue that only concerns business owners until you consider where it can lead. Last year, Chase Bank closed the personal bank accounts—not business accounts—of several adult film stars. Although Chase denied that this had anything to do with Choke Point, one of the actresses said she was told her account was closed because she was considered high risk. More recently, American Express, Visa and MasterCard stopped processing payments to classified advertising site Backpage.com. Visa and MasterCard stated that this was because some of the people who advertise adult services in Backpage could be involved in human trafficking. Now, a large portion of the ads in Backpage aren’t even for adult services, but neither company will process any of them.
Banks and credit cards are a public service that neither businesses nor individuals can function without. This very open definition of what constitutes risk essentially gives financial services full power to decide on a whim what we, as consumers, can and cannot do with our money. Our governments should be regulating these decisions in order to ensure fair and equal access—yet it seems they might be the cause of the problem in the first place.V
Brenda Kerber is a sexual health educator who has worked with local not-for-profits since 1995. She is the owner of the Edmonton-based, sex-positive adult toy boutique the Traveling Tickle Trunk.