True. But the same could also be said for all of e-commerce.
What? I’ve never heard of this. Does AE have a policy of not allowing porno charges? How do they know? If I try to subscribe to Playboy with an AE card, will they tell me something like “Transaction rejected. No porn for you.”?
Ummm, I thought AE already did!
And here’s where I’m really scratching my head. I’ve never heard of anything like this. What happens to the guy who charges the 39.95 on his card? And why does he call up and then cancel the next morning? Can he not afford the charges and just wants to cram in a night of porn viewing before cancelling?
And what’s with this $100 charge back fee? If this is true, then why do the webmasters stand for it (as it would lead to a $60 loss on each such transaction), and how are they making any money?
By “these guys” I can only assume he means the webmasters, which would of course mean that they’re losing tons of money, just because some guy cancels a forty dollar transaction after one day.
I always assumed that credit card companies made money off of porn the same way they made money off of anything else charged on a credit card. This whole “charge back” thing is a new one on me that makes absolutely no sense.
Has anyone heard of this? Can you explain it? Or did this writer just majorly screw up his facts?
I’ve never heard of a fee for charge-backs, and I can’t imagine any merchant standing for it. Charge-backs can be totally out of the merchant’s control. If my credit card processor tried to pull this on me, I’d stop taking those cards in a heartbeat. I agree, somethin’ don’t smell right here.
The dope here is that credit card companies are tired of dealing with accusations of fraud against pornography sites, and with the resulting canceled transactions. American Express kissed off the whole business in May, claiming that it wasn’t a viable business model. Other credit card companies have instituted tough policies (like those $100 chargebacks) to dissuade the porn people, or at least get their trouble’s worth out of them.
Speaking as a fraud analyst for a major V/M issuer, porn charges are a huge pain in the rear.
Not only is there legitimate fraud involved, there is a large amount of non-fraud or as we call it “I’d never do that” claims.
I haven’t heard about the $100 chargeback fee with my bank.
Exactly right. I’ve heard plenty of tales about chaps who sign up, download as many pictures and clips as they can from the website overnight, then cancel the subscription and enjoy more relaxed viewing later.
Grr, hit submit before I was done.
My bank did the same with online gambling. Too much fraud, too many false fraud claims, and far too many accounts with this activity ending up in collections. Also, several of the companies started filing false information when they realized we were cracking down them (False merchant codes/swipe codes/company names) Based on talks with my contacts at other issuers, we weren’t the only one.
Per the cardmember agreement, a credit card issuer can reserve the right to refuse any charge. In my bank’s case, the losses involved with online gambling were too much to keep accepting the activity.
My best fiend makes his living off of porn sites (as a reseller, not a provider), so I know a little about it. Porn programs offer a “trial period”, usually of between three and five days. If you cancel the membership before the end of the trial period, you still have access until the end of the trial period. If you don’t cancel, then your subscription is automatically renewed until you do cancel. This is where “I would never do that!” comes in. Even though the sign-up page contains “terms and conditions” that clearly inform the consumer that his subscription will continue until cancelled, some people either never read the T&C or they forget to cancel in time. (There are some disreputable sites that make it difficult to cancel, but the industry is pretty-much self-regulating and rather conservative for obvious reasons.)
Here’s an analogy: I have auto-pay on my storage unit, so my credit card is automatically billed until I cancel the rental. Suppose I move my stuff into the unit for a month, then empty it the day a week before the rent is due. I don’t cancel the rental, and the storage company charges my card again. I would go to my credit card company and say, “Hey! I’m not renting there any more! I moved out before the end of the month! These guys are fraudulently charging me rent!” The credit card company would contact the storage company and ask for an explanation. The storage company would explain their terms and conditions and provide a signed contract to prove that I understood them when I rented the unit. For porn sites, I’d assume the same thing happens; but since porn providers are seen as some sort of evil entity trying to poison the children, the credit card companies are less likely to believe their electronic contracts than they are to belive a “legitimate” business like a storage facility.