LONDON - PayPal has announced it has agreed a partnership with the City of London Police (CoLP) and the International Federation of the Phonographic Industry (IFPI), the trade body that represents the music industry, to cut funding to websites deemed ‘illegal’ by the IFPI and CoLP.
Although PayPal has always banned the use of its services for items that infringe or violate any copyright under its Acceptable Use Policy, the partnership is expected to bring an end to thousands of illegal websites - many operating from Russia and the Ukraine - that sell music illegally on the net.
The partnership follows the announcement, in March, that payment processors Visa and MasterCard also agreed to withdraw their services from copyright infringing websites. “We knew that when illegal services could no longer take payments from credit cards they would try to work around the restriction”, said Frances Moore, Chief executive of IFPI. “That is why we and the CoLP approached PayPal.”
The partnership is an indication the payments industry is moving further against pirate websites by cracking down on the way they are funded. Brett Rowland, Counsel at Sidley Austin, called the agreement “a significant development”, while Rohan Massey, Partner at McDermott Will & Emery UK LLP, thinks PayPal’s move is “a step in the right direction”.
Dawn Osborne, Partner at Palmer Biggs Legal, said PayPal’s decision is “in line with the trend that intermediaries are expected to help against all forms of illegality”. Massey also recognises the “trend to try and limit unlawful behaviour by applying pressure to payment providers”.
However, Consult Hyperion’s Director Dave Birch thinks PayPal’s decision “is a dangerous precedent. I assume PayPal will now stop Saudi consumers from buying alcohol and French shoppers from buying fake Chanel perfume.”
Forcing payment processors, auction websites and online retailers to follow PayPal’s example by law would be “wrong”, said Birch. “How is eBay supposed to know whether my Rolex is real or fake? How is PayPal supposed to know whether I'm actually in the US or not?”
Therefore, Osborne said “it is refreshing to see Paypal volunteer rather than be brought to the table kicking and screaming. Presumably, they would prefer to negotiate the terms on which they will help rather than be forced to accept terms imposed by the authorities.”
Published previously in the August issue of E-Finance & Payments Law Policy, CPP, copyrights apply at all times, London 2011. Picture: PayPal.
