PayPal's overbroad rules unfairly punish VPN users

The rules are clearly wrong when they affect a broader group of people than the policy is targeting.

PayPal is reportedly ramping up its crackdown against so-called "unblocker" tools, setting a potentially devastating precedent for those who rely on them for privacy protection.


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Reported by TorrentFreak last week, PayPal has already cut off one firm, UnoTelly, which provides virtual private networking (VPN) services and domain name service tools, from accepting payments from its customers. It's thought other companies have, or will face the same fate.

In an email to the company, PayPal said that the company falls foul of its rules.

"Under the PayPal Acceptable Use Policy, PayPal may not be used to send or receive payments for items that infringe or violate any copyright, trademark, right of publicity or privacy, or any other proprietary right under the laws of any jurisdiction," said the email.

You can see it from PayPal's perspective. There are hundreds of site-unblocking services available that allow users to tunnel into a country as though they were physically there. Many use these services to bypass copyright blocks and service limitations from streaming services like Netflix in order to watch foreign televisions and films, like letting millions of US residents watch far-superior British television, for example. Netflix recently began preventing some users from accessing its service using site-unblocker tools, likely to keep its content providers happy and deals intact.

The problem is many others use these site-unblocking services because they live in countries of mass surveillance, political censorship, and government monitoring. Site-unblockers are widely used in the developing world to bypass government filters while others use it to prevent being spied on by state authorities.

Unblocker sites are double-edged. They have many uses, some copyright infringing and others helpful to those who wish to game the system. But they also -- literally -- keep people safe and secure, just like encryption does.

From PayPal's own acceptable use policy (emphasis ours), you are prohibited from using PayPal to:

relate to transactions involving (a) narcotics, steroids, certain controlled substances or other products that present a risk to consumer safety, (b) drug paraphernalia, (c) cigarettes, (d) items that encourage, promote, facilitate or instruct others to engage in illegal activity, (e) stolen goods including digital and virtual goods, (f) the promotion of hate, violence, racial intolerance or the financial exploitation of a crime, (g) items that are considered obscene, (h) items that infringe or violate any copyright, trademark, right of publicity or privacy or any other proprietary right under the laws of any jurisdiction, (i) certain sexually oriented materials or services, (j) ammunition, firearms, or certain firearm parts or accessories, or (k) certain weapons or knives regulated under applicable law.

Fair, you can't use PayPal to buy drugs, firearms and ammunition, or time with a sex worker. But it's clear parts of these rules are considerably vague and open to abuse.

What is "obscene"? What's considered obscene in some of the 200 countries the payments giant operates in could be widely accepted in others. Is it illegal to be an activist in a war-torn country, where its activists are bypassing state censors to get the message out about government abuses? In that jurisdiction, probably yes.

You can surely understand why PayPal doesn't want to facilitate "items that infringe or violate any copyright [or] trademark." The technology isn't being misused, but the rules are wrong when they affect a broader group of people than the policy is targeting. There are numerous and some high-profile cases of these rules being applied over-broadly.

The policy is to protect PayPal, not its customers. As veteran tech columnist Dan Gillmor tweeted, the rules are "a reminder that highly centralized payment systems can put a big dent in free speech."