Operation Choke Point

Banks And The #Pornocalypse 

Back in 2014, we wrote a little bit about Operation Choke Point, the US Department of Justice effort to intimidate banks into refusing to handle the banking business of a wide variety of politically-disfavored industries, including the adult industry. Facts on the ground were, and are, few.
We're not sure Franklin Veaux’s recent experiences with mysteriously losing his credit card processing for the Onyx sex game he sells (which looks like a fun way to loosen up a nerdy party and at least encourage it in the direction of a friendly orgy) can count as confirmation of the Operation Choke Point story, but he’s correct that his experience perfectly matches the profile:

This past April, I received notification from Best Payment Solutions that they were terminating my account. They gave no reason, other than they “sometimes terminate accounts for risk reasons.” In the thirteen years I’d been with them, I’d only had one chargeback–a rather remarkable record I doubt few businesses can match. Didn’t matter.
I was told that BPS would no longer work with me, but their parent company, Vantiv, would be happy to give me a merchant account. Vantiv’s underwriters, I was told, had looked at my Web site and had no problem with its contents.
So I did the requisite paperwork, turned it all in, and…nothing. For weeks, during which time I was effectively out of business.
Then, four weeks later, I heard back from Vantiv. We’re so sorry, they said, we thought we could give you a merchant account, but we can’t. When I asked why, the only thing they would say was “risk reasons.”
Thus ensued a mad scramble to find a new merchant account underwriter, a process that’s normally very time-consuming and tedious. I finally found another underwriter, which I will decline to name for reasons that will become obvious once you read the rest of this post, and I’m back up and running again…but not before I was out of business for over a month.

The rest of Franklin’s article reports on a backlash against Operation Choke Point, spearheaded (ironically) by the wingnut media after reports that small retailers of guns and ammo were among the thirty or so disfavored groups targeted. According to Wikipedia, Operation Choke Point has been more-or-less terminated in response to the backlash:

On January 29, 2015, the FDIC issued a Financial Institution Letter that states “The Federal Deposit Insurance Corporation (FDIC) issued a Financial Institution Letter today encouraging supervised institutions to take a risk-based approach in assessing individual customer relationships, rather than declining to provide banking services to entire categories of customers without regard to the risks presented by an individual customer or the financial institution’s ability to manage the risk.
The Washington Times says this letter “effectively ends Operation Choke Point.” As reported by Forbes, “a change in the political landscape, many businesses threatening legal action and a congressman with a background in banking [forced] the bureaucracy to admit to misconduct and to stop financial attacks on legal businesses that the Obama administration deems to be politically incorrect.” Reports of continued termination of services to legitimate businesses, however, continue.

They do indeed continue, as witnessed by Franklin’s recent loss of processing. The people he dealt with were pretty clear that the “risk reasons” for not doing business with him didn’t have anything to do with the actual risks posed by his business. Whatever the official status of Operation Choke Point, it sounds as if the banks are still terminating banking relationships with adult-industry businesses to avoid official disapproval, however informal.