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PaperclipPerfector  9mo ago (text post)   27012 thread views

Culture War Roundup for the week of September 1, 2025

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and that adult products have higher charge back rates

The banks are not wrong on this point. The industry is rife with bad practices on the customer side - teenage boys using their dad's credit cards, dads telling mum that a teenage boy used dad's credit card, people paying (real and virtual) card thieves for stolen credit cards to protect their anonymity, people who just feel comfortable committing so-called "friendly fraud" (i.e. buying something and taking advantage of the pro-consumer bias in the chargeback process to avoid paying for it) against a pornographer in a way they wouldn't against any other website, real post-purchase regret. And it isn't immune to bad practices on the website side - particularly hard-to-cancel subscriptions. Also, from a bank perspective, the low barriers to entry attract the kind of business that will be surprised by this and go bust under a wave of chargebacks leaving their acquiring bank with a loss.

Most banks are not interested in providing payment processing to the online smut industry for sound commercial reasons - it is a specialised market niche for banks who are happy dealing with massive chargeback fraud and whose fees reflect this. I suspect the Venn diagram of "Banks Valve management are comfortable working on Steam payments with" and "Banks which want to bank smut" looks like a pair of spectacles.

I think this is all bullshit at this point. On average to make a credit card purchase I have to enter the credit card number, the CCV, open the bank app on the smartphone and enter the PIN. Depending how you count it's either 3 factor authentication or 4 factor authentication.

Once you have a system like this in place you can just say "no" to chargebacks, there is no constitutional rights to chargebacks on pornography. I don't know how things are in other countries but I strongly suspect that the "we have a lot of chargebacks" has been a fake excuse for around 20 years.

I count two, maaaaybe three, factors. Entering two passwords in the same form is definitely not 2FA.

You have to have the credit card (one factor) or the credit card and the ccv (two factors) the smartphone app connected to the bank account (one factor) and the pin number (one factor).

The number on the credit card (something you know), the other number on the credit card (something you know), the smartphone app connected to the bank (something you have[conditions apply]), and the pin number (something you know but enter into an entirely different system from the CC/CVV, the compromise of those two probably being heavily correlated).

Consider as well how completely the banks and cc companies will screw over their customers in hundreds of other ways. They will cheerfully add 47 overdraft and late fees and not reverse those, but somehow chargebacks make them squeamish?

These rules also get applied where chargeback rates are very low, and related rules get applied by Mastercard against the high-risk payment processors that are supposedly the market niche for managing higher levels of chargeback fraud.

(And these rules are less reasonable than they look at first glance: "non-con" here is not talking about just or even primarily real-world rape, but is so broad as to include hypnosis kink.)

I was not aware that any payment processors even existed that would willingly get into this industry. Not even limiting it to the ones that valve is willing to work with. But I've never tried to run a smut based business, so I'm ignorant of the options available.

They exist, but a good deal of the problem is that many are also pinch points, here. Stripe, for example, once would proudly proclaim their happiness working with adult product merchants until WellsFargo teabagged them; today, their policy completely bans all adult content and services.

CCBill used to be the transaction provider of last resort for a lot of adult businesses on the edge -- and you'd pay a pretty sizable penny for the privilege -- but they've had the screws turned on them, too. Not tied into that ecosystem enough to know if there's a new meta; most modern stuff in the circles I move have found it more effective to work in gray-compliance for more 'mainstream' sellers that are too big to notice them.

"They have a lot of chargebacks" is unfalsifiable without a congressional investigation, so it's an easy excuse. And when we did get the congressional investigation--surprise, it turned out to be pressure from ideologues, not getting a lot of chargebacks.

You would have said, at the time, that Operation Chokepoint and the crypto sequel are just the payment processors fearing chargebacks. And you would have been wrong.

Also, I don't think Steam has a lot of chargebacks, because if you do they ban your entire account and every game you've ever purchased.

At the scale Valve operates at, surely banks pass the costs of chargebacks along to them. But also, banks probably aren't worried about them going bankrupt from chargebacks and leaving them with the bill.

This wouldn't be true of a fly-by-night porn site, though.

Note, none of this matters if what you mean by chargebacks is when you do it through the bank rather than the store itself.

Depends on what you count as a lot. I've done up to three refunds per month a few years ago and they all got refunded, I think at some point I went up to five and only then received a warning, but after taking a break, my account is fine, and I can still get refunds.

You're talking about Steam refunds. I'm talking about chargebacks. The oft-repeated argument is credit card companies hate porn because people get their rocks off and try to chargeback, or tell their wives it was fraud. But no, if you try to go around Steam support and charge back with the bank you're pretty much never interacting with Steam again.

Operation Chokepoint involved a co-ordinated pullback from businesses, some of which (like payday lending) were known to be high-risk businesses which required special handling by their banks (and were charged accordingly) but with risks that were well-understood and a long history of banks who chose to do that kind of specialist business successfully banking them, and some of which (like gun stores) were known to be unproblematic other than politically. This is pathognomic for non-transparent regulatory intervention, which was later uncovered. Nobody who understands banking thought at the time that banks were making sensible commercial decisions to debank gun shops - the question we were asking was whether this was a hivemind effect among woke bank risk managers and compliance staff, or a conspiracy run by the regulators. It turned out to be the latter.

"Online smut generates high chargeback rates" is, among banking risk and compliance professionals, a notorious fact that no longer requires a citation. "Gun shops generate high chargeback rates" is something that would be surprising, if true. (AFAIK, it isn't, and the regulators pushing Chokepoint didn't claim it was).

The "crypto sequel" involves an industry which is well-known to be a wretched hive of scum and villainy, and which had just turned out to be even more full of scum and villainy than people had expected. This included both the kinds of villainy that, while not a direct threat to bank safety and soundness, are unbankable for public policy reasons (Binance) and the more directly fraudulent kinds of villainy (FTX). Even if banks were unregulated, there is no world in which the Binance and FTX scandals happened without it becoming significantly harder to bank crypto startups - banks do not want to bank scum and villainy for both commercial and ethical reasons! In the world we live in, the banks which specialised in the niche business of banking crypto failed to do their jobs and the regulatory response reflected this. The winds that changed when FTX turned out to be a fraud were not political ones. This Bits About Money post has details and receipts. Two banks (Metropolitan and Silvergate) suffered franchise-threatening losses as a result of banking reputable-by-industry-standards crypto operations which turned out to be fraudulent. That should change behaviour - just like it did when multiple banks suffered franchise-threatening losses due to certain practices in the US mortgage market in 2006-7.

The Steam smut scandal is a bank that chooses not to bank smut (in most cases, banks which don't bank online smut made that decision back when Avenue Q was still running and have retained the policy ever since) re-evaluated the business of a platform that was onboarded as a non-smut business but was, in fact, getting about 10% of its revenue from smut. That they did this in the response to the Kangaroo Karens rather than proactively is an indictment of said bank's customer due diligence, but it doesn't reflect a regulatory-driven change in policy. Valve have said that they are going to look for a smut-friendly bank to take on this business, which is capitalism working as advertised.

Yes, crypto is high risk. And as you mention, payday lenders were also high risk. But even though they are high risk, that doesn't mean that the risk is the whole story, and that there isn't any pressure of some other kind. And without looking at the payment processors' financial records or finding a smoking gun, there's no airtight way to tell the difference between a genuine market-based reason, and something else that's being covered up by giving a market-based reason that's true, but wouldn't have been such a big issue on its own.

So of course, porn generates high chargeback rates. But if you go from "high chargeback rates exist" to "high chargeback rates are the reason", it will become impossible for you to notice any other explanations.

re-evaluated the business of a platform that was onboarded as a non-smut business but was, in fact, getting about 10% of its revenue from smut.

Mastercard also lied about it, which looks suspicious, along with suddenly noticing that Steam was a problem just now.

The winds that changed when FTX turned out to be a fraud were not political ones.

That particular example was not political pressure, but there was political pressure in addition to it. Again, high risk and political pressure that makes it worse than if it was just high risk, can exist at the same time.

Nobody who understands banking thought at the time that banks were making sensible commercial decisions to debank gun shops...

"Online smut generates high chargeback rates" is, among banking risk and compliance professionals, a notorious fact that no longer requires a citation. "Gun shops generate high chargeback rates" is something that would be surprising, if true. (AFAIK, it isn't, and the regulators pushing Chokepoint didn't claim it was).

Yup. They went with "reputational risk", which is overtly admitting that the only 'problem' that could be in play is that some people would disapprove of the banks doing business with gun shops. One may still not think that "online smut generates high chargeback rates" is a sufficient reason to pull back, but it's genuinely a qualitatively different type of reasoning, and the two cases don't really stand/fall together by analogy.

That these bans follow political winds is, I think, sufficient to demonstrate that the chargeback argument is just an excuse/soldier. This content has been around for years, being paid for by credit card, and the credit card companies didn't somehow not notice a high chargeback rate that whole time.

And throughout that time, being an acquiring bank for online smut peddlers has been a niche business that the JP Morgan Chases of the world don't really want to do.

Visa and Mastercard have always been happy to have payments for mainstream smut on their networks. It looks like they still are - Valve are saying that the problem with smut on Steam is being driven by their "payment processor" and that they are looking for an alternative, which strongly suggests that the party that wants out is the acquiring bank.

Visa and Mastercard have always been happy to have payments for mainstream smut on their networks.

You might be surprised.

That these bans follow political winds is, I think, sufficient to demonstrate that the chargeback argument is just an excuse/soldier.

Do they follow political winds? I don't think so.

In 2014, Chase Bank went after the personal accounts of "adult entertainers." This was part of Operation Choke Point, done under the Obama DOJ.

In 2021, OnlyFans banned adult content (I...guess this just didn't stick?) again due to banking issues. OnlyFans is based in the UK, but it seems it had issues with JPMorgan Chase as well.

This is just on a quick Google, I'm sure there's more examples out there.

In 2014, Chase Bank went after the personal accounts of "adult entertainers." This was part of Operation Choke Point, done under the Obama DOJ.

That sounds pretty damned political to me. Certainly it's not about chargebacks.

Then I think I misunderstood you - I agree that Choke Point was political, but I took you to be saying that it had to do with what party was winning at musical chairs this time, when it's actually a consistent feature across administrations - my mistake!

Operation Chokepoint was explicitly political in the sense that it was an Obama administration policy designed to achieve the policy goals of the Democratic party.

The identification of certain industries, including smut, as high-risk and the expectation that banks who choose to bank them have appropriate procedures in place rather than just handing out small business accounts on standard terms, is something that has been around for a very long time regardless of the party in power and reflects a combination of regulatory common sense (some industries really are fraud magnets) and bipartisan views on the role of the banking system (including, critically, the idea that banks should actively seek to avoid banking criminal businesses)

Before Operation Chokepoint was revealed, the explanation for the debanking, at least for payday lenders and porn, was exactly what you claim is the explanation here: those industries are high risk. This wasn't true; they were debanked because the government told them to. They may have actually been high risk, but the claim that they were being debanked for that was a coverup for the true reason. The lesson from this is that you should not just say "sure, those industries are high risk" and credulously believe that the credit card companies and payment processors are only reacting to market forces.

As you note, dealing with high risk has been around for a very long time. Which means that if the behavior changes, it probably isn't because of high risk, even if someone claims it is.

Operation Chokepoint was explicitly political in the sense that it was an Obama administration policy designed to achieve the policy goals of the Democratic party.

Isn't part of the point being made that when Operation Chokepoint was taking place, it's results were being explained away as "the identification of certain industries, including smut, as high-risk and the expectation that banks who choose to bank them have appropriate procedures in place rather than just handing out small business accounts on standard terms, is something that has been around for a very long time regardless of the party in power"?

I think the capitalist solution would be that you simply charge smut providers higher fees.

Also, I am not sure if this applies to steam accounts, especially if they have years of content on them. I imagine if I tried to cancel a CC purchase made to my steam account, the first thing steam would do would be to lock my account -- after all, I have just said that it was used by an unauthorized person.

Also, steam is kind of a big platform and unlikely to go bankrupt over some porn game chargebacks.

teenage boys using their dad's credit cards

This is puzzling to me. If daddy told the CC company "actually, that was my 15yo son paying for smut online", I would imagine the CC company to reply "no problem, here is your money back. Also, we have just reported your son to the police for wire fraud. Have a nice day!"

This would reduce such claims to a very small number, because most families would gladly forgo 100$ to avoid having a family member investigated for financial crimes.

Instead, they mostly react without the middle sentence. But my view of CC is that they are a laughably insecure system whose insecurity simply gets papered over by them absorbing losses through fraud.

Everything you say is correct. You absolutely can bank smut providers, and charge high enough fees for doing so to make a profit - precisely because there are things you can do to manage the high risk of chargeback fraud. But this is a specialised niche banking service, and apparently not one that Valve's first-choice banking partner wants to provide.

But my view of CC is that they are a laughably insecure system whose insecurity simply gets papered over by them absorbing losses through fraud.

Precisely. It turns out that normies find dealing with effective security difficult and confusing, which means that a laughably insecure system that charges high enough fees to eat the resulting fraud losses is hugely socially valuable.

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