In December of 2020, while much of America was busy trying to stay viable during the biggest pandemic of our lifetimes, New York Times columnist Nicholas Kristof fired shots at the adult entertainment industry. In an opinion column titled “The Children of Pornhub,” he took aim largely at the adult industry’s best known online company, Mindgeek, the owners and operators of Pornhub. I could tell from the ignorance on display in the comments section that Kristof’s piece was going to cause damage to people who didn’t deserve it.
I’d argue that Kristof’s column was centered around an edge case, gave readers a distorted view of facts, unjustly targeted an adult company for things that happen with more frequency on mainstream websites, and appeared to be politically motivated. None of that mattered though in a post-facts America. Within days, Mindgeek lost its ability to accept credit cards, and shortly after that, the big credit card companies released new, restrictive rules for all adult industry merchants.
Given all this damage that was spurred through the NY Times editorial, it’s noteworthy that on November 18th of this year a different NY Times columnist published a very different look at our industry. Times reporter Tara Siegel Bernard, who writes about personal finance topics for the newspaper, dropped “Sex Workers Have Been Shunned by Banks, Even When Their Work is Legal,” a thorough and compassionate look at the serious banking discrimination challenges that sex workers and adult companies alike face at the hands of financial institutions.
The title of the piece centers sex workers, who absolutely suffer from targeted banking discrimination, and it also focuses on the impact of these actions on all legal adult businesses — everything from online services, to strip clubs and legal brothels in Nevada.
“Banks are shutting down what appear to be an increasing number of customer accounts, usually with little explanation, throwing their customers’ lives into chaos,” she wrote. “The closures have hit small-business owners who routinely deposit cash, individuals who withdrew larger sums than usual and others who unknowingly transacted with suspected fraudsters.”
According to Bernard’s reporting, banks typically behave this way towards adult entities because they’re concerned about possible criminal activities like money laundering or sex trafficking. She correctly notes however that losing the ability to access modern banking is a “life-altering” development for sex workers and adult companies. Without access to banking, sex workers commonly rely on others to handle their money, opening them up to financial exploitation.
It’s typically not clear to victims of banking discrimination what set off the bank’s actions. It’s possible they simply received money from someone the bank believes is suspicious, or perhaps the pattern of deposits/withdrawals caused bank officials to take a closer look and found a suggestive/sexy social media account for the customer.
Making everything worse, the banks are not consistent with their behavior.
“The thresholds for the bank’s alarm bells, or their overall risk tolerance, may be dialed up and down over time, which means someone whose work involved sexually explicit texting, voice and video call service — phone sex for the digital age — may have their account activated one day and shut down the next,” Bernard wrote.
This problem is not at all limited to sex workers. According to Bernard’s reporting, nearly two-thirds of us who work on the legal adult industry have lost either their bank account, or their online payments account. Of those people, nearly 40% of them experienced this in the past year alone.
The adult industry’s trade group, the Free Speech Coalition, has been working hard to raise awareness of this growing problem. They’ve hired Pierre Whatley, a former bank examiner, to lobby in Washington on behalf of the industry.
“Overwhelmingly, the response from Congress is: We did not know this is happening or to the degree this is happening,” Whatley is quoted as saying. “Whether or not you agree with sex work, you have to set aside your personal feelings and look at the core issue. Is this a lawful, legal business — and if so, shouldn’t they have a right to a bank account?”
What are all these banks and financial organizations afraid might happen? Bernard explains they are afraid of drawing extra attention from government agencies that regulate the financial industry. When they come across activity that makes them nervous — which could be something as simple as too many cash deposits — they create and file a Suspicious Activity Report (SAR), and if this happens too many times, the account is typically closed.
Some banks are so risk-adverse, they’ll even cut ties with some customers they know are doing perfectly legal business in the adult space.
Bernard points out that Chase and Wells Fargo both have nothing in their agreements that specifically prohibit adult businesses, however both are also well known for closing industry-related accounts. Bank of America does provide a “no adult” warning with its Zelle customer agreement document, but not its checking account customer agreement.
Chase representative Trish Wexler told the Times that “We do not prohibit people in this industry from having personal bank accounts with us,” however that statement flies boldly in the face of my own personal experience, since five years ago Chase Bank not only shut down my personal accounts, but also suddenly closed all three of my credit cards without any warning or notice. I found out while trying to order a pizza.
While they didn’t provide any official reason for this action even when I asked repeatedly, a local Chase employee that I knew admitted it was because they saw that I was connected to the adult industry — and I don’t even sell (or distribute) adult content in any way.
I know an IT company that also lost its account with Chase, one can guess because many of its customers worked in adult. I also know a legal service that lost an account with Chase for the same reason.
I’m suspicious of financial institutions by nature, and it’s easy to believe there’s more happening behind the scenes than anyone would tell a NY Times reporter. Targeting ‘unpopular’ or ‘non-vanilla’ speech by pressuring financial institutions is a potentially effective way around legal protections like the First Amendment. Commercial entities like banks are, after all, entitled to decide who they do and do not want to do business with, regardless of the impact these decisions might have on lives.
In the past few years, efforts to censor and contain the online adult industry have been about the strongest I’ve seen in my 26+ years working in this business. It’s not hard to imagine conservative politicians or faith-based advocacy groups working behind the scenes to put pressure on banks simply because they do not approve of our industry — even if they’re probably consuming our products when they’re all alone with an internet connection.
If you have a Times subscription, Bernard’s piece is well worth reading. It gives additional details on the above issues, and also tells the personal stories of a variety of industry workers. NY Times researchers Susan Beachy and Ron Lieber also contributed to her report.
We may not have found any solutions to this problem yet, however it’s heartening to know the Free Speech Coalition has recognized the existential threat of banking discrimination and is actively working on raising awareness in Congress. Hopefully this latest NY Times story will help the cause.