6 ms·

The Morality Police in Your Checking Account

138 points by panarky 13y ago

seacious 13y ago
I think this is where crypto currencies really shine. They remove the gatekeeper for financial services. All their other benefits (and risks) are less significant.
- namlem 13y ago
  Crypto-currency is hardly necessary for this. Just bank with a credit union.
- gte910h 13y ago
  Bitcoin in particular however is not anonymous. It's exceedingly public.
  - virtue3 13y ago
    and forever put into the block chain. A _lot_ of people don't realize this.
    - Karunamon 13y ago
      "Public" is one thing, associating a name to a hash is something else entirely. Keeping in mind that a user can have unlimited wallets and send coins between them on the fly...
      - gte910h 13y ago
        You can certainly try to keep a secret for a very long time. But the secret nature of bitcoin is waaaaay exaggerated. If you use it, you can be traced often."I have 300 wallets" is possible, but not convienent
        Karunamon 13y ago
        Basic bitcoin security is new wallets for each transaction. It is still a very hard problem just looking at the block chain that if this hash sends coins to that hash who the owner of the recieving wallet is. Is it the same person filling a new wallet or a transaction?
      - virtue3 13y ago
        sorry for old reply. While not "the most reliable" your IP address is logged with each transaction. That is more than enough information to make up who you are. Especially if you transfer to a wallet that is hosted online and requires valid government ID to create.
- betterunix 13y ago
  "They remove the gatekeeper for financial services" Hardly. Even if you ran your entire business on Bitcoin, you would still need to find an exchange when the tax man came around demanding fiat currency (unless you are dealing in such tiny amounts that you can rely on people you find online, but then your business is probably not very successful). Exchanges are the gatekeepers of cryptocurrencies; Bitcoin, Litecoin, and every other "coin" would have just been worthless toys if exchanges had not been set up. There is also the reality of cryptocurrency use that must be considered: almost all businesses (legal and illegal) that "accept Bitcoin" actually "accept $NATIONAL_CURRENCY via a Bitcoin exchange/service." Illegal businesses try to decouple their Bitcoin payments from the exchange i.e. they attempt to launder their money (no surprises there); legal businesses proudly announce which Bitcoin service they are using to "accept Bitcoin." Those services and exchanges are gatekeepers in practice, and are increasingly compliant with money service laws and regulations (just like banks).
panarky 13y ago
My local Chase branch has been calling and emailing me relentlessly, multiple times per week for the last four weeks or so, ostensibly because required "profile" information is missing on my business accounts. I replied by email to ask what information they need. They won't give any specifics, but insist that I schedule time to meet in person. I've had the same Chase accounts for many years, and my business is pretty mundane, so I assumed it was just overzealous cross-selling of services or investments that I don't need. But according to this EFF article, maybe there's more to it?
- yid 13y ago
  Sounds like you might have been selected for their know-your-customer compliance: http://en.wikipedia.org/wiki/Know_your_customer http://en.wikipedia.org/wiki/Know_your_customer
  - bjelkeman-again 13y ago
    I just got a letter in the post from my bank in Sweden about this. Maybe there is a deadline somewhere, or just a coincidence.
hga 13y ago
Earlier item using a Reason article, much more suspicious this is a new action of Operation Choke Point, and listing other areas possibly under attack: https://news.ycombinator.com/item?id=7667309 https://news.ycombinator.com/item?id=7667309
higherpurpose 13y ago
Something that just came up to me: why is making porn movies for money legal, but prostitution is illegal? It seems to me that either both should be illegal or both should be legal. The current situation seems pretty contradictory. At the end of the day it's "sex for money" in both cases.
- mschuster91 13y ago
  Freedom of speech/arts, I think.
- anigbrowl 13y ago
  The main pragmatic objection to prostitution is not the sale of sex but the consumer traffic it tends to bring into a neighborhood, which pisses off the people who live there.
- spacehome 13y ago
  Society is saying it's immoral and depraved and wrong to have sex for money ... unless you let us watch.
- omnipath 13y ago
  In some states, it IS illegal to shoot porn there. Prostitution isn't a federal crime, outside of coercion or human trafficking. That's why it's legal in certain Nevada counties, but nowhere else. It's up to the state to decide what is what, and to be honest, most of them don't allow either to exist.
- rquantz 13y ago
  The performers in porn are actors being paid for their performance.
- betterunix 13y ago
  "Something that just came up to me: why is making porn movies for money legal, but prostitution is illegal?" The law is not a strictly logical system (this is usually a good thing, despite the common negative perceptions). Pornography was once illegal; then the interpretation of the law changed so that it would be considered "protected speech," unless it is being displayed in certain contexts. Prostitution is illegal in most of the USA, except for certain forms which are not illegal (e.g. it may not be illegal to have sex with your boss in exchange for a promotion).
jluxenberg 13y ago
If you have a Chase account you can afford to walk away from, send them a nastygram threatening to take your business elsewhere.
jack-r-abbit 13y ago
A lot of hosting providers do not want to host adult sites. Mine told me it was primarily because those sites are frequently subject to DDoS attacks and they didn't want to constantly battle that. They wouldn't even allow me to host a site that just handled the sign-up and payment processing even when absolutely no adult content would be hosted on that site (or even my account with them). (I ended up never pursuing my idea so it was a moot point) Many insurance companies will not write home owners policies for people that have a blacklisted breed of dog. When faced with insuring my home, I chose a company that didn't mind my pit bull. I'm not sure if I should really be outraged that a bank doesn't want to do business with a person they see as a high risk. It might not be a 1 or 2 click process to switch banks but it is not that hard. A Wells Fargo customer support person was rude to me one time and I had a new account at a new bank by week's end.
- samstave 13y ago
  We need empirical definition of what constitutes "high risk" in every single situation where that measure is a factor. It must be absolutely transparent else it should be deemed that the claimer of high risk is actually a money laundering vector, or arbitrary service denier. Further, we need a war-on-bankers. Bank simple and standard treasury are attempts at pulling the wool over people via "startup hype" whereby they still back themselves with traditional banks. Square and stripe are simply the "new mastercard" There is no actual real innovative movement in finance. Bitcoin is going to be attacked, co-opted and robbed. It is also being gamed/cornered by people like the Winklevii... What we need is a crytpo-credit system which is abstracted and anonymous to banking-of-traditional-fiat where a user can build a crypto-credit score from which real currency transactions can emerge/be borrowed. The current system is an oppressive, exclusive system designed to be exceedingly top heavy.
  - angersock 13y ago
    "The current system is an oppressive, exclusive system designed to be exceedingly top heavy." Perhaps, but it works alarmingly well.
  - nikcub 13y ago
wmf 13y ago
Bank neutrality anyone? It seems like we could make banks "financial common carriers" so that they aren't liable for customers' illegal behavior as long as the banks themselves follow the law.
- noarchy 13y ago
  Governments might like the ability to offload responsibility for enforcement (and therefore, cost) to the banks themselves.
EricaJoy 13y ago
My first reaction to this story was outrage, followed by skepticism. The story around Operation Choke Point (OCP) appears to have taken a year long breather (the first story about porn stars losing their bank accounts was reported in May 2013 http://www.cnbc.com/id/100746445 http://www.cnbc.com/id/100746445), only to resurface with a WSJ article on the subject: http://online.wsj.com/news/articles/SB10001424052702304810904579511911684102106 http://online.wsj.com/news/articles/SB1000142405270230481090.... The WSJ article was penned by former governor of Oklahoma and current American Bankers Association (ABA) President, Frank Keating. The ABA is a national trade association that represents all banks (source: http://www.opensecrets.org/news/2012/09/capital-eye-opener-september-7.html http://www.opensecrets.org/news/2012/09/capital-eye-opener-s...), essentially a lobbying firm for the banking industry. One wonders why the banking industry would care enough to have the President of their lobbying firm publish a piece about this in the WSJ. Surely a Republican from Oklahoma cares little and less about the financial well being of porn stars. On the same exact day the WSJ article was published (April 24, 2014), an article written by Jason Oxman, CEO of the Electronic Transactions Association (another lobbying group) was published, also lambasting OCP: http://thehill.com/blogs/congress-blog/economy-budget/204174-operation-choke-point-harmful-to-flow-of-commerce http://thehill.com/blogs/congress-blog/economy-budget/204174... These two articles, if you can call them that, given the authorship, are the only source pieces at the root of the current media interest in OCP. It's clear (to me anyhow) that the porn stars aren't the story here, they're just the fodder to get the people in a tizzy about OCP. I'm wondering what else is in involved in Operation Choke Point that's making the banking industry and the payment processors call out the big guns. Whatever it is, I imagine large sums of money are involved.
- tptacek 13y ago
  Weird. I looked up Operation Choke Point and you're right, the lead-off stories are from Keating and Oxman, followed by an article in Reason, all suggesting that OCP is a scheme run by DOJ to suppress legal businesses through the banking system. Then I found a WaPo article saying that OCP was a scheme by DOJ to monitor and constrain fraudulent businesses like payday loans and prepaid cards. Before your comment, I had no inkling that any of these enforcement actions might have been orginating with DOJ at all. I figured, Chase just doesn't want to service the porn industry. But it looks like that's not actually the case! My priors indicate that the Democratic DOJ is not actually launching a shadow jihad against porn (of all things) by intervening in the bank system. That's just not a Dem issue. On the other hand, consumer financial fraud is a top-tier issue for the DOJ under any administration, liberal or conservative. Occam's razor suggests the WaPo is probably right-er than some op-ed by a banking lobbyist. Why are EFF and Reason and the largest bank lobby campaigning against OCP? Weird! Thanks for pointing this out. I flagged the story originally, but have now unflagged it.
saryant 13y ago
Chase has been on a know-your-customer kick lately, targeting credit card churners who manufacture spend involving linked Chase checking accounts: http://www.flyertalk.com/forum/chase-ultimate-rewards/1526572-chase-closed-my-cc-account-300-000-ur-points.html http://www.flyertalk.com/forum/chase-ultimate-rewards/152657... The consensus is that heavy deposits of money orders into Chase accounts prompted manual fraud reviews, leading to shutdowns of the entire client relationship (credit and deposit accounts).
ChuckMcM 13y ago
While its important to publicly shame institutions that do this sort of thing, its less unclear how widespread it is.
- pmorici 13y ago
  It's the US government forcing them to do this. how will shaming the bank change the fact that they are probably obligated to do what the government tells them to?
  - ChuckMcM 13y ago
    I don't see anywhere that this was done at the behest of the government. While the government has shut down accounts in all banks involved in criminal activities, adult entertainment is not a criminal activity. And the article it is only Chase bank, not all banks. Do you have additional information that the EFF hasn't included? I'd love a reference to that. There is some more complex issues in the Bay area with cannibis retailers since it is "legal" by state law and "illegal" by federal law to sell pot. That puts the banks in a tricky place. So far though they have not pulled accounts for licensed dispensaries.
    - pmorici 13y ago
      This Washington Post article describes the situation in more detail... http://www.washingtonpost.com/blogs/wonkblog/wp/2014/04/16/operation-choke-point-the-battle-over-financial-data-between-the-government-and-banks/ http://www.washingtonpost.com/blogs/wonkblog/wp/2014/04/16/o... Essentially the government is threatening legal action against the banks unless they shut accounts down of businesses and individuals associated with those businesses that the government doesn't like. Chase is the biggest bank out there so it isn't surprising that the government probably targeted them fist and they also have the largest number of potential jilted customers to complain. Even though we are only hearing about 2 or 3 cases here there are certainly many more who aren't making a stink in the media. Also: http://www.theguardian.com/money/2014/mar/23/operation-choke-point-payday-lenders-issa-banks http://www.theguardian.com/money/2014/mar/23/operation-choke...
sirdogealot 13y ago
How did they determine who was a porn actor and who was not?
xupybd 13y ago
One possibility here is that many would pay for porn with stolen credit cards. Thus making business that sell porn high risk to banks? That said from the other comments on here it does sound like there could be more to it.
daemin 13y ago
By all libertarian interpretations Chase bank should be allowed to do - or to not do - business with whomever it wants. For example if it wants not to deal with people/businesses in the porn industry, or even people of a certain skin colour, it shouldn't have to. Whether this is good for businesses, or even if it is a moral or right thing to do, is yet to be determined.

138 points by panarky 13y ago

I think this is where crypto currencies really shine. They remove the gatekeeper for financial services. All their other benefits (and risks) are less significant.

namlem 13y ago
Crypto-currency is hardly necessary for this. Just bank with a credit union.
gte910h 13y ago
Bitcoin in particular however is not anonymous. It's exceedingly public.
- virtue3 13y ago
  and forever put into the block chain. A _lot_ of people don't realize this.
  - Karunamon 13y ago
    "Public" is one thing, associating a name to a hash is something else entirely. Keeping in mind that a user can have unlimited wallets and send coins between them on the fly...
    - gte910h 13y ago
      You can certainly try to keep a secret for a very long time. But the secret nature of bitcoin is waaaaay exaggerated. If you use it, you can be traced often."I have 300 wallets" is possible, but not convienent
      - Karunamon 13y ago
        Basic bitcoin security is new wallets for each transaction. It is still a very hard problem just looking at the block chain that if this hash sends coins to that hash who the owner of the recieving wallet is. Is it the same person filling a new wallet or a transaction?
    - virtue3 13y ago
      sorry for old reply. While not "the most reliable" your IP address is logged with each transaction. That is more than enough information to make up who you are. Especially if you transfer to a wallet that is hosted online and requires valid government ID to create.
betterunix 13y ago
"They remove the gatekeeper for financial services" Hardly. Even if you ran your entire business on Bitcoin, you would still need to find an exchange when the tax man came around demanding fiat currency (unless you are dealing in such tiny amounts that you can rely on people you find online, but then your business is probably not very successful). Exchanges are the gatekeepers of cryptocurrencies; Bitcoin, Litecoin, and every other "coin" would have just been worthless toys if exchanges had not been set up. There is also the reality of cryptocurrency use that must be considered: almost all businesses (legal and illegal) that "accept Bitcoin" actually "accept $NATIONAL_CURRENCY via a Bitcoin exchange/service." Illegal businesses try to decouple their Bitcoin payments from the exchange i.e. they attempt to launder their money (no surprises there); legal businesses proudly announce which Bitcoin service they are using to "accept Bitcoin." Those services and exchanges are gatekeepers in practice, and are increasingly compliant with money service laws and regulations (just like banks).

panarky 13y ago

My local Chase branch has been calling and emailing me relentlessly, multiple times per week for the last four weeks or so, ostensibly because required "profile" information is missing on my business accounts. I replied by email to ask what information they need. They won't give any specifics, but insist that I schedule time to meet in person. I've had the same Chase accounts for many years, and my business is pretty mundane, so I assumed it was just overzealous cross-selling of services or investments that I don't need. But according to this EFF article, maybe there's more to it?

yid 13y ago
Sounds like you might have been selected for their know-your-customer compliance: http://en.wikipedia.org/wiki/Know_your_customer http://en.wikipedia.org/wiki/Know_your_customer
- bjelkeman-again 13y ago
  I just got a letter in the post from my bank in Sweden about this. Maybe there is a deadline somewhere, or just a coincidence.

hga 13y ago

Earlier item using a Reason article, much more suspicious this is a new action of Operation Choke Point, and listing other areas possibly under attack: https://news.ycombinator.com/item?id=7667309 https://news.ycombinator.com/item?id=7667309

higherpurpose 13y ago

Something that just came up to me: why is making porn movies for money legal, but prostitution is illegal? It seems to me that either both should be illegal or both should be legal. The current situation seems pretty contradictory. At the end of the day it's "sex for money" in both cases.

mschuster91 13y ago
Freedom of speech/arts, I think.
anigbrowl 13y ago
The main pragmatic objection to prostitution is not the sale of sex but the consumer traffic it tends to bring into a neighborhood, which pisses off the people who live there.
spacehome 13y ago
Society is saying it's immoral and depraved and wrong to have sex for money ... unless you let us watch.
omnipath 13y ago
In some states, it IS illegal to shoot porn there. Prostitution isn't a federal crime, outside of coercion or human trafficking. That's why it's legal in certain Nevada counties, but nowhere else. It's up to the state to decide what is what, and to be honest, most of them don't allow either to exist.
rquantz 13y ago
The performers in porn are actors being paid for their performance.
betterunix 13y ago
"Something that just came up to me: why is making porn movies for money legal, but prostitution is illegal?" The law is not a strictly logical system (this is usually a good thing, despite the common negative perceptions). Pornography was once illegal; then the interpretation of the law changed so that it would be considered "protected speech," unless it is being displayed in certain contexts. Prostitution is illegal in most of the USA, except for certain forms which are not illegal (e.g. it may not be illegal to have sex with your boss in exchange for a promotion).

jluxenberg 13y ago

If you have a Chase account you can afford to walk away from, send them a nastygram threatening to take your business elsewhere.

jack-r-abbit 13y ago

A lot of hosting providers do not want to host adult sites. Mine told me it was primarily because those sites are frequently subject to DDoS attacks and they didn't want to constantly battle that. They wouldn't even allow me to host a site that just handled the sign-up and payment processing even when absolutely no adult content would be hosted on that site (or even my account with them). (I ended up never pursuing my idea so it was a moot point) Many insurance companies will not write home owners policies for people that have a blacklisted breed of dog. When faced with insuring my home, I chose a company that didn't mind my pit bull. I'm not sure if I should really be outraged that a bank doesn't want to do business with a person they see as a high risk. It might not be a 1 or 2 click process to switch banks but it is not that hard. A Wells Fargo customer support person was rude to me one time and I had a new account at a new bank by week's end.

samstave 13y ago
We need empirical definition of what constitutes "high risk" in every single situation where that measure is a factor. It must be absolutely transparent else it should be deemed that the claimer of high risk is actually a money laundering vector, or arbitrary service denier. Further, we need a war-on-bankers. Bank simple and standard treasury are attempts at pulling the wool over people via "startup hype" whereby they still back themselves with traditional banks. Square and stripe are simply the "new mastercard" There is no actual real innovative movement in finance. Bitcoin is going to be attacked, co-opted and robbed. It is also being gamed/cornered by people like the Winklevii... What we need is a crytpo-credit system which is abstracted and anonymous to banking-of-traditional-fiat where a user can build a crypto-credit score from which real currency transactions can emerge/be borrowed. The current system is an oppressive, exclusive system designed to be exceedingly top heavy.
- angersock 13y ago
  "The current system is an oppressive, exclusive system designed to be exceedingly top heavy." Perhaps, but it works alarmingly well.
- nikcub 13y ago

wmf 13y ago

Bank neutrality anyone? It seems like we could make banks "financial common carriers" so that they aren't liable for customers' illegal behavior as long as the banks themselves follow the law.

noarchy 13y ago
Governments might like the ability to offload responsibility for enforcement (and therefore, cost) to the banks themselves.

EricaJoy 13y ago

My first reaction to this story was outrage, followed by skepticism. The story around Operation Choke Point (OCP) appears to have taken a year long breather (the first story about porn stars losing their bank accounts was reported in May 2013 http://www.cnbc.com/id/100746445 http://www.cnbc.com/id/100746445), only to resurface with a WSJ article on the subject: http://online.wsj.com/news/articles/SB10001424052702304810904579511911684102106 http://online.wsj.com/news/articles/SB1000142405270230481090.... The WSJ article was penned by former governor of Oklahoma and current American Bankers Association (ABA) President, Frank Keating. The ABA is a national trade association that represents all banks (source: http://www.opensecrets.org/news/2012/09/capital-eye-opener-september-7.html http://www.opensecrets.org/news/2012/09/capital-eye-opener-s...), essentially a lobbying firm for the banking industry. One wonders why the banking industry would care enough to have the President of their lobbying firm publish a piece about this in the WSJ. Surely a Republican from Oklahoma cares little and less about the financial well being of porn stars. On the same exact day the WSJ article was published (April 24, 2014), an article written by Jason Oxman, CEO of the Electronic Transactions Association (another lobbying group) was published, also lambasting OCP: http://thehill.com/blogs/congress-blog/economy-budget/204174-operation-choke-point-harmful-to-flow-of-commerce http://thehill.com/blogs/congress-blog/economy-budget/204174... These two articles, if you can call them that, given the authorship, are the only source pieces at the root of the current media interest in OCP. It's clear (to me anyhow) that the porn stars aren't the story here, they're just the fodder to get the people in a tizzy about OCP. I'm wondering what else is in involved in Operation Choke Point that's making the banking industry and the payment processors call out the big guns. Whatever it is, I imagine large sums of money are involved.

tptacek 13y ago
Weird. I looked up Operation Choke Point and you're right, the lead-off stories are from Keating and Oxman, followed by an article in Reason, all suggesting that OCP is a scheme run by DOJ to suppress legal businesses through the banking system. Then I found a WaPo article saying that OCP was a scheme by DOJ to monitor and constrain fraudulent businesses like payday loans and prepaid cards. Before your comment, I had no inkling that any of these enforcement actions might have been orginating with DOJ at all. I figured, Chase just doesn't want to service the porn industry. But it looks like that's not actually the case! My priors indicate that the Democratic DOJ is not actually launching a shadow jihad against porn (of all things) by intervening in the bank system. That's just not a Dem issue. On the other hand, consumer financial fraud is a top-tier issue for the DOJ under any administration, liberal or conservative. Occam's razor suggests the WaPo is probably right-er than some op-ed by a banking lobbyist. Why are EFF and Reason and the largest bank lobby campaigning against OCP? Weird! Thanks for pointing this out. I flagged the story originally, but have now unflagged it.

saryant 13y ago

Chase has been on a know-your-customer kick lately, targeting credit card churners who manufacture spend involving linked Chase checking accounts: http://www.flyertalk.com/forum/chase-ultimate-rewards/1526572-chase-closed-my-cc-account-300-000-ur-points.html http://www.flyertalk.com/forum/chase-ultimate-rewards/152657... The consensus is that heavy deposits of money orders into Chase accounts prompted manual fraud reviews, leading to shutdowns of the entire client relationship (credit and deposit accounts).

ChuckMcM 13y ago

While its important to publicly shame institutions that do this sort of thing, its less unclear how widespread it is.

pmorici 13y ago
It's the US government forcing them to do this. how will shaming the bank change the fact that they are probably obligated to do what the government tells them to?
- ChuckMcM 13y ago
  I don't see anywhere that this was done at the behest of the government. While the government has shut down accounts in all banks involved in criminal activities, adult entertainment is not a criminal activity. And the article it is only Chase bank, not all banks. Do you have additional information that the EFF hasn't included? I'd love a reference to that. There is some more complex issues in the Bay area with cannibis retailers since it is "legal" by state law and "illegal" by federal law to sell pot. That puts the banks in a tricky place. So far though they have not pulled accounts for licensed dispensaries.
  - pmorici 13y ago
    This Washington Post article describes the situation in more detail... http://www.washingtonpost.com/blogs/wonkblog/wp/2014/04/16/operation-choke-point-the-battle-over-financial-data-between-the-government-and-banks/ http://www.washingtonpost.com/blogs/wonkblog/wp/2014/04/16/o... Essentially the government is threatening legal action against the banks unless they shut accounts down of businesses and individuals associated with those businesses that the government doesn't like. Chase is the biggest bank out there so it isn't surprising that the government probably targeted them fist and they also have the largest number of potential jilted customers to complain. Even though we are only hearing about 2 or 3 cases here there are certainly many more who aren't making a stink in the media. Also: http://www.theguardian.com/money/2014/mar/23/operation-choke-point-payday-lenders-issa-banks http://www.theguardian.com/money/2014/mar/23/operation-choke...

sirdogealot 13y ago

How did they determine who was a porn actor and who was not?

xupybd 13y ago

One possibility here is that many would pay for porn with stolen credit cards. Thus making business that sell porn high risk to banks? That said from the other comments on here it does sound like there could be more to it.

daemin 13y ago

By all libertarian interpretations Chase bank should be allowed to do - or to not do - business with whomever it wants. For example if it wants not to deal with people/businesses in the porn industry, or even people of a certain skin colour, it shouldn't have to. Whether this is good for businesses, or even if it is a moral or right thing to do, is yet to be determined.