AVS's Sites Hit with Visa Fee - GoFuckYourself.com

Zmack · 05-04-2003, 06:18 AM

http://www.forbes.com/2003/05/01/cz_sl_0501porn.html

Credit
Visa's Porn Crackdown
Seth Lubove, 05.01.03, 3:40 PM ET

LOS ANGELES - Is Visa sinisterly putting the squeeze on the Internet porn business at the behest of the U.S. government? That's just one conspiracy theory going around the industry following new rules Visa U.S.A. imposed late last year requiring adult content Web sites to pay a $750 fee and register intimate financial details about their operations. Little noticed outside the freewheeling online sex trade, the rules have created a firestorm among porn peddlers who complain that Visa is taking a pound of flesh out of their business.

The controversy once again casts an unwelcome light on the symbiotic relationship between porn operators and the legitimate companies that allow them to thrive by quietly processing their credit-card payments and providing server hosting. One of the biggest victims of Visa's actions is the otherwise conservative InterCept (nasdaq: ICPT - news - people ). The financial services firm, which had 2002 sales of $227 million, is based in the bucolic Atlanta suburb of Norcross, where it's still against the law to serve liquor by the drink. In a move that must have seemed smart at the time, InterCept last year paid $104 million for something called Internet Billing Co., or iBill, which acts as a third-party credit-card processor for Internet businesses that are too small or shaky to deal with credit-card banks directly. IBill makes its money by taking a 15% cut of every transaction.

You wouldn't know it from iBill's plain-vanilla Web site, but as much as 85% of the $400 million in credit-card payments it processes come from such naughty sites as "Bareback Boys Club," "Midget Sex Zone" and many too nasty to mention. IBill and firms like it have become so influential in the porn trade that they act somewhat as policemen by weeding out extra-sleazy operators and frauds. IBill also helpfully cloaks porn purchases from the prying eyes of wives and loved ones by discretely referring to the purchases on credit-card bills by its own generic name. To solicit business, the company is a fixture at such industry bacchanals as Internext, where its executives rub shoulders with porn stars and similar ilk.

Make that was a fixture. Even though InterCept never disclosed the privately held iBill's revenue at the time of the acquisition, there's no question that the deal has had an outsized impact on the larger InterCept, which also had to take a $20 million charge in last year's fourth quarter to cover fallout from iBill and a smaller acquisition. InterCept's stock collapsed to a recent $4 from as high as $34 last year, after the revelation that iBill lost as much as 20% of its processing business due to the new Visa rules driving away porn sites. Insult to injury, MasterCard recently declared that iBill was in "noncompliance" with the credit-card association's chargeback rules, resulting in an assessment of almost $6 million.

Chargebacks, one of the biggest headaches of processing credit cards for porn sites, typically occur when, say, someone's wife finds out he's been buying porn. Rather than owning up, the aggrieved party tells the credit-card company that he's shocked--shocked--that someone else was purchasing porn on his card, and demands that the charges be removed. Due to that and other reasons, American Express (nyse: AXP - news - people ) has refused to handle porn transactions since 2000, and PayPal, now owned by eBay (nasdaq: EBAY - news - people ), will cease to deal with the trade beginning in May.

But the revelations come too late for InterCept, which now says it's trying to "focus our sales effort on mainstream businesses." Plaintiffs lawyers are circling with the predictable shareholder lawsuits, many complaining of "material misrepresentations" and "false assurances" made by InterCept about iBill's dependence on porn (a press release at the time of the acquisition benignly referred to iBill's clientele as "Web merchants," while management claimed that adult sites represented less than 10% of iBill's transactions). "We disagree with the allegations and plan to defend vigorously," says an InterCept spokeswoman in a written response to questions from Forbes.com. In the meantime, iBill's former president and chief executive has quit, and the business has been restructured into a new InterCept Payment Solutions division.

Now Visa is extending its reach to "age verification services," the Napster-like portals that allow subscribers access to thousands of sex-drenched Internet sites for a monthly fee. But again, one business most directly affected by the crackdown is the big financial services outfit First Data Corp. (nyse: FDC - news - people ). The company's First Financial Bank subsidiary recently received a letter from Visa demanding that the bank make sure that any age verification services and the Web sites in its so-called merchant portfolio are "evaluated and appropriately registered with Visa U.S.A." Just in case the bank didn't get the message, Visa's letter warned of "significant financial penalties including the imposition of conditions" if the bank failed to comply. First Data spokesmen didn't return calls or e-mails seeking comment.

Beyond the impact on InterCept's and First Data's businesses, lawyers for the porn industry now see the heavy hand of the U.S. government behind Visa's rules. Visa also didn't return calls for comment, but porn industry attorneys Lawrence Walters of Weston, Garrou & DeWitt and Gregory Piccionelli of Brull, Piccionelli, Sarno, Braun & Vradenburgh were happy to spin about what they see as a possible setup for the time when the government decides to wage war on Internet porn.

"The requirement of creating more and more records and information could lead one to conclude that they either have been asked by the government to make sure these processors are generating this information, or a more objective concern that now that the information is out there, the government can get it," says Walters. "The threat of obscenity prosecutions makes this a real concern."

Piccionelli, who had just been dealing with a client whose Visa processing rights had been summarily yanked due to excessive chargebacks, complains that Visa is abusing its power and "tightening the noose around the adult industry."

"Absolute power corrupts, and Visa and MasterCard are dangerously empowered monopolies," he declares. "There are no checks or balances. They have the potential to become a worldwide currency."

At least that's their theory. Having proven itself able to survive other crackdowns, the slippery porn business is unlikely to go away anytime soon. But for legitimate firms such as InterCept, the damage has already been done.

Theo · 05-04-2003, 06:25 AM

"Now Visa is extending its reach to "age verification services," the Napster-like portals that allow subscribers access to thousands of sex-drenched Internet sites for a monthly fee."

if they request from the avs co. to pay the fee its not big deal, if the fee is for every single avs site....... i won't comment.

Zmack · 05-04-2003, 06:26 AM

The company's First Financial Bank subsidiary recently received a letter from Visa demanding that the bank make sure that any age verification services and the Web sites in its so-called merchant portfolio are "evaluated and appropriately registered with Visa U.S.A."

-

Sounds like they are going to request it from every individual.. I seriously doubt they are going to pay that $750 fee for every one that uses thier avs services..

In anycase I just ran across this and thought I would share the news

Brujah · 05-04-2003, 06:31 AM

Why does the sky keep falling ?

It's been falling for 8 years. When is it going to stop ?

FlyingIguana · 05-04-2003, 06:36 AM

Quote:

Originally posted by Zmack
The company's First Financial Bank subsidiary recently received a letter from Visa demanding that the bank make sure that any age verification services and the Web sites in its so-called merchant portfolio are "evaluated and appropriately registered with Visa U.S.A."

-

Sounds like they are going to request it from every individual.. I seriously doubt they are going to pay that $750 fee for every one that uses thier avs services..

In anycase I just ran across this and thought I would share the news

that would pretty much kill avs.

Zmack · 05-04-2003, 06:41 AM

yup sure would.. guess its a good thing I did not invest in having avs sites built like I was considering.

I ran an avs site many many years ago when adultcheck and adultbouncer etc first started that was back when the goverment was imposing a penalty of 50k per day for not having a warning page on your website to stop minors from entering. however AdultCheck Service did pretty good but that was before the recent influx of AVS services now they are oversaturated and your chance at pulling a dollar is slim to nil.

Ill stick with the paysites for now atleast im turning a fairly nice profit on them right now

stocktrader23 · 05-04-2003, 06:43 AM

Quote:

Originally posted by FlyingIguana

that would pretty much kill avs.

Hmm, depends on what you are talking about. I don't do AVS but I know there are thousands upon thousands of websites in the system. If Visa drops a $750 bomb on each individual webmaster I might just fork over the fee and boot up an AVS as long as the AVS systems don't decide to close up shop.

Brujah · 05-04-2003, 06:46 AM

FlyingIguana · 05-04-2003, 06:46 AM

Quote:

Originally posted by stocktrader23

Hmm, depends on what you are talking about. I don't do AVS but I know there are thousands upon thousands of websites in the system. If Visa drops a $750 bomb on each individual webmaster I might just fork over the fee and boot up an AVS as long as the AVS systems don't decide to close up shop.

i have some avs sites and i would just delete them if i had to pay a fee. i'm sure a lot of webmasters would do the same thing. i don't know how many make a decent amount of money with avs sites, but i'm assuming that a good % of them don't.

jimmyf · 05-04-2003, 06:47 AM

Visa and Master Card just settled a law suit with a bunch of main stream companies, Wal Mart and others. Master Card has to pay over 100 Million, think Visa's fine was triple that of Master Card.

SGS · 05-04-2003, 06:50 AM

If you couldnt afford the $750 then why bother anyway?

stocktrader23 · 05-04-2003, 06:51 AM

Quote:

Originally posted by FlyingIguana

i have some avs sites and i would just delete them if i had to pay a fee. i'm sure a lot of webmasters would do the same thing. i don't know how many make a decent amount of money with avs sites, but i'm assuming that a good % of them don't.

And that is exactly why I would be dropping $750 to start a new AVS.

Dveron · 05-04-2003, 06:53 AM

Quote:

Originally posted by Zmack
however AdultCheck Service did pretty good but that was before the recent influx of AVS services now they are oversaturated and your chance at pulling a dollar is slim to nil.

Slim to none. WTF are you talking about? Plenty of $$ to be made in AVS, now more than ever.

Nysus · 05-04-2003, 06:53 AM

You likely only have to register once for all of your sites. If you just do AVS part-time or for a bit of extra income then it'd likely not be worth to keep them, but if it's your full-time or large revenue maker then $750 would just be a shot in the arm, likely.

Cheers,
Matt

stocktrader23 · 05-04-2003, 06:54 AM

Quote:

Originally posted by Dveron

Slim to none. WTF are you talking about? Plenty of $$ to be made in AVS, now more than ever.

Shhhhhhhh, I think we've said too much. ;)

BVF · 05-04-2003, 06:57 AM

Quote:

Originally posted by FlyingIguana

i have some avs sites and i would just delete them if i had to pay a fee. i'm sure a lot of webmasters would do the same thing. i don't know how many make a decent amount of money with avs sites, but i'm assuming that a good % of them don't.

I'm divided....I'm sure that a LOT of people won't pay that fee and then they will disappear....you know the people who built those sponsor content shit avs sites aren't gonna pay....only people like the true amateurs over at Voyeurweb/Redclouds and some other pornographers who would think 750 would be a good investment in AVS especially if everybody else is getting out of the game.

BVF · 05-04-2003, 06:58 AM

and I only have around 3 avs sites...but it pays my rent every month so I would probably invest 750 FOR ALL THREE! But I can't see myself paying 750 x 3.

BV · 05-04-2003, 07:11 AM

I'm glad to hear about the fee, better than pulling the plug t totally! I'd pay it in a heartbeat!

Snake Doctor · 05-04-2003, 07:17 AM

This article was posted last week, so its nothing new, and no new rules have been implemented, its all just speculation.

But even if this did come to pass, it would be $750 per webmaster, not $750 per url. But you would have to have a listing of all your urls for VISA to see. (So people hiding illegal shit behind AVS's would be S.O.L.)
ARS has like 80+ sites and I'm sure they only had to pay the $750 once. (If they had to pay $750 per url I think the BYOT program would be dropped)

Who knows though, I'd imagine 80% or so of the people spamming the AVS links lists with their sites don't have the cash to pay the fee, so it would definitely eliminate a lot of competition. Maybe even be like the old days when a new listing from Adult Check could crash your server.

Lensman · 05-04-2003, 08:35 AM

Interesting article

Tipsy · 05-04-2003, 08:58 AM

Not a new thing though - simply a little more detail on what's now slightly old news.

The biggest problem seems to be that VISA is confusing AVS sites with paysites and thinking they're much the same thing. Part of the problem when you have a company like VISA with little or no understanding of the business imposing BS regulations.

The only thing to do is wait and see how it turns out. $750 per person is no bigee and worth the investment. However $750 per site, domain or even AVS system may be a different matter entirely. We shall see...

thefreakybeaver · 05-04-2003, 09:14 AM

"Now Visa is extending its reach to "age verification services," the Napster-like portals that allow subscribers access to thousands of sex-drenched Internet sites for a monthly fee."

"Napster-like" I haven't followed the news on napster but I wouldn't compare sharing copyright music with an avs system. Sounds like they are allowing access to sites that DON'T want their subscribers to have access.

"Sex-drenched internet sites" geez they make it sound so dirty! I'm so sick of ppl being prudes and making like sex isn't a NORMAL thing!

gruffy · 05-04-2003, 09:19 AM

Quote:

Originally posted by FlyingIguana
that would pretty much kill avs.

You say that like its a bad thing.

Fletch XXX · 05-04-2003, 09:21 AM

Quote:

Originally posted by Soul_Rebel

if they request from the avs co. to pay the fee its not big deal, if the fee is for every single avs site....... i won't comment.

FlyingIguana · 05-04-2003, 09:25 AM

Quote:

Originally posted by gruffy

You say that like its a bad thing.

avs sites have their place

Sarah_Jayne · 05-04-2003, 09:34 AM

why does it tick me off that they use the term "legitimate" to describe non-porn companies?

gruffy · 05-04-2003, 09:41 AM

Quote:

Originally posted by sarah_webinc
why does it tick me off that they use the term "legitimate" to describe non-porn companies?

so they don't piss off the christians who read their paper.

Sarah_Jayne · 05-04-2003, 09:46 AM

yeah because a non-porn company has never proven not to be legitimate. ;)

gruffy · 05-04-2003, 09:51 AM

Quote:

Originally posted by FlyingIguana

avs sites have their place

%99 of them raise some serious quality issues, and this impacts everyone trying to sell porn.

SteveLightspeed · 05-04-2003, 09:56 AM

I loved this statement about Ibill

"To solicit business, the company is a fixture at such industry bacchanals as Internext, where its executives rub shoulders with porn stars and similar ilk."

I'm positive I've never seen any Ibill exec getting his SHOULDERS rubbed at Internext... lol

And who are they calling "similar ilk?"

Next thing they'll start calling all of us PORNOGRAPHERS

Steve Lightspeed

KRL · 05-04-2003, 10:00 AM

Has anyone looked at the members sections on AVS sites recently? I just checked some out and most of them have 15 to 30 pics for their entire members section.

Yeh, sure you're buying the network for your money, but individually its pretty lame.

It's pathetic to say the least. If VISA takes a look inside any of these sites I bet a lot won't be approved.

If they hit each site individually with the $750 per site, the AVS's will be gone. I know one webmaster who built up something like 2000 sites on AC and I doubt he'd fork over $1.5 Mil to VISA to register them all.

This should be interesting.

HeadPimp · 05-04-2003, 10:04 AM

My feeling is that Visa will crash sometime soon. They are becoming a bit too powerful and the Government needs to step in with some anti-trust action...

chupacabra · 05-04-2003, 10:06 AM

Quote:

My feeling is that Visa will crash sometime soon. They are becoming a bit too powerful and the Government needs to step in with some anti-trust action...

actually, i think this might be the inverse of what is really happening... it seems more likely that VISA is squeezing the porn industry *for* the government, who has recently decided to forget about the entire seperation of church and state..

evilpurple · 05-04-2003, 10:08 AM

Quote:

Originally posted by BVF

I'm divided....I'm sure that a LOT of people won't pay that fee and then they will disappear....you know the people who built those sponsor content shit avs sites aren't gonna pay....only people like the true amateurs over at Voyeurweb/Redclouds and some other pornographers who would think 750 would be a good investment in AVS especially if everybody else is getting out of the game.

I agree. I'm a relative newbie in the porn game, but have followed the biz closely for years, after an initial short stint. I quit then to focus on mainstream work, but recently decided to make a second go, and I've seen first hand how much tougher it is to make money in this business now - I think more boundaries like this that make it take more capital to get started will just make it more attractive for those of us who want to approach it seriously.

If you're experienced enough or confident enough in your business skills to be willing to make a proper investment in your business, you'll fork over a 750 dollar fee in a heartbeat if you know that the same 750 dollar fee will limit the amount of competition you'll have dramatically.

In the long run I think it will just mean a professionalization of the AVS business. Similar obstacles elsewhere will probably be good for the business, by shutting off a large group of wannabe webmasters who today just throw up sites without thinking it through because it hardly costs anything.

gruffy · 05-04-2003, 10:09 AM

Quote:

Originally posted by KRL
Has anyone looked at the members sections on AVS sites recently? I just checked some out and most of them have 15 to 30 pics for their entire members section.

I took advantage of NetVerifier's "free 24 hour webmaster pass" last year to look at what the AVS tards are doing.

%99 of sites are on junk free hosting. Same stale 1997 content from zip/rockbottom/david lace. All spammed accross thousands of sites.

You wonder why its hard to sell memberships? Because the adverage porn surfer has trouble distinguish beetween an AVS and a real site.

And yes, the majority of porn spam most people are getting are from AVS sites. This sure as hell fucks everyone over when it makes the news and polticians decide they don't like their 10 year old kids getting porn spam.

tony286 · 05-04-2003, 10:12 AM

I am for the fees on two levels, one it cleans up alot of the garbage no more kiddy sites. Secondly and I know this sounds terrible it thins out the herd.Too many people in the game because it costs nothing to get in, so I am for $750 for Visa and I hope MC start charging also so it costs $2200 to start a website it will slow down growth. Some say well there will be just more free porn not true someone who wants to make money, going free might be fun for alittle while but it will get played and they will disppear.

Paul Markham · 05-04-2003, 10:24 AM

Quote:

Originally posted by Brujah
Why does the sky keep falling ?
It's been falling for 8 years. When is it going to stop ?

I don't see this as the sky falling. I see it as an opportunity.

Let's be positive and think what will happen if this comes around.

Anyone who can't afford $750 will be out of the AVS business, probably end up in the already over crowded TGP business.

Those left will be able to make more money by the reduction of competition.

Maybe a few AVS systems will disappear, but this is not exactly a under supplied area.

A culling always makes the herd stronger, cos with less to feed off the resources, those left get stronger.

The only thing that will harm this industry is if the US goverment made it illegal to jerk off and the men of the US obeyed.

What are the odds of that happening? We just have to stay alert and flexible.

Steve · 05-04-2003, 10:29 AM

hmmmm........$750 do say goodbye to a tremendous amount of competition? That's a fucking bargain. Even per URL. Shit, especially per URL. I'd bet 75% of AVS webmasters would throw in the towel at that point.

Carrie · 05-04-2003, 10:33 AM

Quote:

Originally posted by Tipsy
The biggest problem seems to be that VISA is confusing AVS sites with paysites and thinking they're much the same thing. Part of the problem when you have a company like VISA with little or no understanding of the business imposing BS regulations.

Well, let's compare a paysite to an AVS.

It has a tour.
It promises loads of pictures inside.
The member's area can only be accessed with a credit card.
It has a login for the members.
There's no real way of knowing that what's promised on the tour will really be delivered once you get inside.
The smaller ones have a one-time fee, but the really big ones have monthly fees for the frequent updates and all of the content inside.

...which one were we talking about again?
Visa is not confusing AVS sites with Paysites. When they put the squeeze down last year to get rid of the sites that cause chargebacks, those sites slipped out from under Visa's thumb and went to PayPal or AVS programs.
PayPal soon started getting hit with the chargebacks and quickly decided they wanted none of that, and announced they were dropping out of adult.
Now Visa has followed those weasly sites into the AVS systems, and they're trying to figure out how to root them out.

Don't blame Visa (or PayPal), blame the webmasters who promise shit they can't or won't deliver and who cause massive chargebacks.

cherrylula · 05-04-2003, 10:38 AM

MORE FREE PORN!!!

gigi · 05-04-2003, 10:44 AM

Quote:

Originally posted by tony404
Some say well there will be just more free porn

That would be my guess....until they figure out how to monitor/enforce rules to free sites anyway....

The big AI companies will still run their programs, the free site webmasters will still build their sites and make money, and those in the AVS game will turn their sites into free sites.

gruffy · 05-04-2003, 10:47 AM

Quote:

Originally posted by charly
Anyone who can't afford $750 will be out of the AVS business, probably end up in the already over crowded TGP business.

two birds with one stone.

HairToStay · 05-04-2003, 10:55 AM

Quote:

Originally posted by Lensman
Interesting article

Yes, and it was interesting when I posted it 3 days ago, too

http://www.gofuckyourself.com/showth...hreadid=130136

assistant27 · 05-04-2003, 11:03 AM

hope visa hits them with some 5 digit fee
and it should be annual fee it will give some breeze to porn industry.

Tipsy · 05-04-2003, 11:04 AM

Quote:

Originally posted by Carrie

Well, let's compare a paysite to an AVS.

It has a tour.
It promises loads of pictures inside.
The member's area can only be accessed with a credit card.
It has a login for the members.
There's no real way of knowing that what's promised on the tour will really be delivered once you get inside.
The smaller ones have a one-time fee, but the really big ones have monthly fees for the frequent updates and all of the content inside.

...which one were we talking about again?
Visa is not confusing AVS sites with Paysites. When they put the squeeze down last year to get rid of the sites that cause chargebacks, those sites slipped out from under Visa's thumb and went to PayPal or AVS programs.
PayPal soon started getting hit with the chargebacks and quickly decided they wanted none of that, and announced they were dropping out of adult.
Now Visa has followed those weasly sites into the AVS systems, and they're trying to figure out how to root them out.

Don't blame Visa (or PayPal), blame the webmasters who promise shit they can't or won't deliver and who cause massive chargebacks.

Just too funny. Far too many people in this thread without the least little clue.

Carry on. I'm enjoying this far too much for it to stop :D

evilpurple · 05-04-2003, 11:08 AM

After thinking a bit more about it, this seems like it will really open the door wide open for more non-cc based alternative payment systems. It doesn't take much to set up systems to legally handle checks and direct bank transfers for a paypal like system in the largest markets. With online banking spreading, that might not be too inconvenient for users.

Add to that that a banking license in certain offshore jurisdictions doesn't cost more than about $500.000, and that you can get your "own" turn key "bank" operating through someone elses bank license for about $50.000 and it doesn't take a genius to see that you can set up a fully legal bank, set up accounts in the UK, one of the Euro countries and the US and offer a Paypal like payment solution except for CC payments from the relative safety of an offshore company for realtive small change compared to the business potential.

Wish I had the cash to set up something like that... If anyone would put up the money, I'd live to get involved on the IT side of things - the potential could be huge with the right people involved

Ah, well... I'll do another startup soon enough.

gigi · 05-04-2003, 11:31 AM

Also, I don't think this will affect free AVS systems like SexKey or FNP.....so there is always that option for AVS webmasters to move their sites to a free system....

tony286 · 05-04-2003, 02:17 PM

I dont think people who are looking to make money will embrace free. Also I think W is probably going to get four more years and people with free porn who live america are going to start going to jail. This will thin the herd and to tell you the truth it should been done a long time ago. This will greatly limit access to porn on online to kids and we have a chance at staying in business.

Zmack · 05-04-2003, 02:22 PM

Quote:

Originally posted by gigi
Also, I don't think this will affect free AVS systems like SexKey or FNP.....so there is always that option for AVS webmasters to move their sites to a free system....

those so called free avs systems are not free..

FNP = There is NO CHARGE for the intial 30 minutes preview. After the preview you will receive a 1 day trial membership for only $1.95(unless cancelled). Thereafter you will be billed $39.95 every 1 month(s) until cancelled.

Zmack · 05-04-2003, 02:24 PM

Quote:

Originally posted by SGS
If you couldnt afford the $750 then why bother anyway?

you have a valid point there... the way I see it is people will close down thier AVS sites or turn them into freesites most people will not pay the $750 fee..

05-04-2003, 06:18 AM	#1
Zmack Registered User Join Date: May 2003 Posts: 31	AVS's Sites Hit with Visa Fee http://www.forbes.com/2003/05/01/cz_sl_0501porn.html Credit Visa's Porn Crackdown Seth Lubove, 05.01.03, 3:40 PM ET LOS ANGELES - Is Visa sinisterly putting the squeeze on the Internet porn business at the behest of the U.S. government? That's just one conspiracy theory going around the industry following new rules Visa U.S.A. imposed late last year requiring adult content Web sites to pay a $750 fee and register intimate financial details about their operations. Little noticed outside the freewheeling online sex trade, the rules have created a firestorm among porn peddlers who complain that Visa is taking a pound of flesh out of their business. The controversy once again casts an unwelcome light on the symbiotic relationship between porn operators and the legitimate companies that allow them to thrive by quietly processing their credit-card payments and providing server hosting. One of the biggest victims of Visa's actions is the otherwise conservative InterCept (nasdaq: ICPT - news - people ). The financial services firm, which had 2002 sales of $227 million, is based in the bucolic Atlanta suburb of Norcross, where it's still against the law to serve liquor by the drink. In a move that must have seemed smart at the time, InterCept last year paid $104 million for something called Internet Billing Co., or iBill, which acts as a third-party credit-card processor for Internet businesses that are too small or shaky to deal with credit-card banks directly. IBill makes its money by taking a 15% cut of every transaction. You wouldn't know it from iBill's plain-vanilla Web site, but as much as 85% of the $400 million in credit-card payments it processes come from such naughty sites as "Bareback Boys Club," "Midget Sex Zone" and many too nasty to mention. IBill and firms like it have become so influential in the porn trade that they act somewhat as policemen by weeding out extra-sleazy operators and frauds. IBill also helpfully cloaks porn purchases from the prying eyes of wives and loved ones by discretely referring to the purchases on credit-card bills by its own generic name. To solicit business, the company is a fixture at such industry bacchanals as Internext, where its executives rub shoulders with porn stars and similar ilk. Make that was a fixture. Even though InterCept never disclosed the privately held iBill's revenue at the time of the acquisition, there's no question that the deal has had an outsized impact on the larger InterCept, which also had to take a $20 million charge in last year's fourth quarter to cover fallout from iBill and a smaller acquisition. InterCept's stock collapsed to a recent $4 from as high as $34 last year, after the revelation that iBill lost as much as 20% of its processing business due to the new Visa rules driving away porn sites. Insult to injury, MasterCard recently declared that iBill was in "noncompliance" with the credit-card association's chargeback rules, resulting in an assessment of almost $6 million. Chargebacks, one of the biggest headaches of processing credit cards for porn sites, typically occur when, say, someone's wife finds out he's been buying porn. Rather than owning up, the aggrieved party tells the credit-card company that he's shocked--shocked--that someone else was purchasing porn on his card, and demands that the charges be removed. Due to that and other reasons, American Express (nyse: AXP - news - people ) has refused to handle porn transactions since 2000, and PayPal, now owned by eBay (nasdaq: EBAY - news - people ), will cease to deal with the trade beginning in May. But the revelations come too late for InterCept, which now says it's trying to "focus our sales effort on mainstream businesses." Plaintiffs lawyers are circling with the predictable shareholder lawsuits, many complaining of "material misrepresentations" and "false assurances" made by InterCept about iBill's dependence on porn (a press release at the time of the acquisition benignly referred to iBill's clientele as "Web merchants," while management claimed that adult sites represented less than 10% of iBill's transactions). "We disagree with the allegations and plan to defend vigorously," says an InterCept spokeswoman in a written response to questions from Forbes.com. In the meantime, iBill's former president and chief executive has quit, and the business has been restructured into a new InterCept Payment Solutions division. Now Visa is extending its reach to "age verification services," the Napster-like portals that allow subscribers access to thousands of sex-drenched Internet sites for a monthly fee. But again, one business most directly affected by the crackdown is the big financial services outfit First Data Corp. (nyse: FDC - news - people ). The company's First Financial Bank subsidiary recently received a letter from Visa demanding that the bank make sure that any age verification services and the Web sites in its so-called merchant portfolio are "evaluated and appropriately registered with Visa U.S.A." Just in case the bank didn't get the message, Visa's letter warned of "significant financial penalties including the imposition of conditions" if the bank failed to comply. First Data spokesmen didn't return calls or e-mails seeking comment. Beyond the impact on InterCept's and First Data's businesses, lawyers for the porn industry now see the heavy hand of the U.S. government behind Visa's rules. Visa also didn't return calls for comment, but porn industry attorneys Lawrence Walters of Weston, Garrou & DeWitt and Gregory Piccionelli of Brull, Piccionelli, Sarno, Braun & Vradenburgh were happy to spin about what they see as a possible setup for the time when the government decides to wage war on Internet porn. "The requirement of creating more and more records and information could lead one to conclude that they either have been asked by the government to make sure these processors are generating this information, or a more objective concern that now that the information is out there, the government can get it," says Walters. "The threat of obscenity prosecutions makes this a real concern." Piccionelli, who had just been dealing with a client whose Visa processing rights had been summarily yanked due to excessive chargebacks, complains that Visa is abusing its power and "tightening the noose around the adult industry." "Absolute power corrupts, and Visa and MasterCard are dangerously empowered monopolies," he declares. "There are no checks or balances. They have the potential to become a worldwide currency." At least that's their theory. Having proven itself able to survive other crackdowns, the slippery porn business is unlikely to go away anytime soon. But for legitimate firms such as InterCept, the damage has already been done.

05-04-2003, 06:31 AM	#4
Brujah Beer Money Baron Industry Role: Join Date: Jan 2001 Location: brujah / gmail Posts: 22,157	Why does the sky keep falling ? It's been falling for 8 years. When is it going to stop ? __________________ Free Premium Domain Lists and Tools at Clickmojo.com For Sale: Obscenity.com

05-04-2003, 06:46 AM	#8
Brujah Beer Money Baron Industry Role: Join Date: Jan 2001 Location: brujah / gmail Posts: 22,157	__________________ Free Premium Domain Lists and Tools at Clickmojo.com For Sale: Obscenity.com

05-04-2003, 06:47 AM	#10
jimmyf OU812 Join Date: Feb 2001 Location: California Posts: 12,651	Visa and Master Card just settled a law suit with a bunch of main stream companies, Wal Mart and others. Master Card has to pay over 100 Million, think Visa's fine was triple that of Master Card. __________________ Epic CashEpic Cash works for me Solar Cash Paysite Plugin Gallery of the day freesites,POTD,Gallery generator with free hosting

05-04-2003, 06:50 AM	#11
SGS Confirmed User Industry Role: Join Date: Dec 2002 Location: Mallorca - Nottingham Posts: 5,176	If you couldnt afford the $750 then why bother anyway? __________________ See sig...

05-04-2003, 06:25 AM	#2
Theo HAL 9000 Industry Role: Join Date: May 2001 Posts: 34,515	"Now Visa is extending its reach to "age verification services," the Napster-like portals that allow subscribers access to thousands of sex-drenched Internet sites for a monthly fee." if they request from the avs co. to pay the fee its not big deal, if the fee is for every single avs site....... i won't comment.

05-04-2003, 06:26 AM	#3
Zmack Registered User Join Date: May 2003 Posts: 31	The company's First Financial Bank subsidiary recently received a letter from Visa demanding that the bank make sure that any age verification services and the Web sites in its so-called merchant portfolio are "evaluated and appropriately registered with Visa U.S.A." - Sounds like they are going to request it from every individual.. I seriously doubt they are going to pay that $750 fee for every one that uses thier avs services.. In anycase I just ran across this and thought I would share the news

05-04-2003, 06:41 AM	#6
Zmack Registered User Join Date: May 2003 Posts: 31	yup sure would.. guess its a good thing I did not invest in having avs sites built like I was considering. I ran an avs site many many years ago when adultcheck and adultbouncer etc first started that was back when the goverment was imposing a penalty of 50k per day for not having a warning page on your website to stop minors from entering. however AdultCheck Service did pretty good but that was before the recent influx of AVS services now they are oversaturated and your chance at pulling a dollar is slim to nil. Ill stick with the paysites for now atleast im turning a fairly nice profit on them right now

05-04-2003, 06:53 AM	#14
Nysus Confirmed User Industry Role: Join Date: Aug 2001 Posts: 7,817	You likely only have to register once for all of your sites. If you just do AVS part-time or for a bit of extra income then it'd likely not be worth to keep them, but if it's your full-time or large revenue maker then $750 would just be a shot in the arm, likely. Cheers, Matt

05-04-2003, 06:58 AM	#17
BVF Black Vagina Finder Join Date: Jan 2002 Location: The Midwest Posts: 13,975	and I only have around 3 avs sites...but it pays my rent every month so I would probably invest 750 FOR ALL THREE! But I can't see myself paying 750 x 3. __________________ Black Pussy Click On Mr Cosby..CCbill, 60/40, 136 FHG's....The Cos Loves Black Ghetto Pussy!!

05-04-2003, 07:11 AM	#18
BV wtf Industry Role: Join Date: Sep 2001 Location: Bikini State, FL USA Posts: 10,914	I'm glad to hear about the fee, better than pulling the plug t totally! I'd pay it in a heartbeat!

05-04-2003, 07:17 AM	#19
Snake Doctor I'm Lenny2 Bitch Join Date: Mar 2001 Location: On top of my soapbox Posts: 13,449	This article was posted last week, so its nothing new, and no new rules have been implemented, its all just speculation. But even if this did come to pass, it would be $750 per webmaster, not $750 per url. But you would have to have a listing of all your urls for VISA to see. (So people hiding illegal shit behind AVS's would be S.O.L.) ARS has like 80+ sites and I'm sure they only had to pay the $750 once. (If they had to pay $750 per url I think the BYOT program would be dropped) Who knows though, I'd imagine 80% or so of the people spamming the AVS links lists with their sites don't have the cash to pay the fee, so it would definitely eliminate a lot of competition. Maybe even be like the old days when a new listing from Adult Check could crash your server. __________________ sig too big

05-04-2003, 08:35 AM	#20
Lensman GFY Chaperone Join Date: Jan 2001 Location: Adult.com Posts: 9,846	Interesting article

05-04-2003, 08:58 AM	#21
Tipsy Confirmed User Join Date: Jul 2001 Location: See sig Posts: 6,989	Not a new thing though - simply a little more detail on what's now slightly old news. The biggest problem seems to be that VISA is confusing AVS sites with paysites and thinking they're much the same thing. Part of the problem when you have a company like VISA with little or no understanding of the business imposing BS regulations. The only thing to do is wait and see how it turns out. $750 per person is no bigee and worth the investment. However $750 per site, domain or even AVS system may be a different matter entirely. We shall see...

05-04-2003, 09:14 AM	#22
thefreakybeaver Confirmed User Join Date: Feb 2002 Posts: 296	"Now Visa is extending its reach to "age verification services," the Napster-like portals that allow subscribers access to thousands of sex-drenched Internet sites for a monthly fee." "Napster-like" I haven't followed the news on napster but I wouldn't compare sharing copyright music with an avs system. Sounds like they are allowing access to sites that DON'T want their subscribers to have access. "Sex-drenched internet sites" geez they make it sound so dirty! I'm so sick of ppl being prudes and making like sex isn't a NORMAL thing!

05-04-2003, 09:34 AM	#26
Sarah_Jayne Now with more Jayne Industry Role: Join Date: Dec 2002 Location: Los Angeles Posts: 40,077	why does it tick me off that they use the term "legitimate" to describe non-porn companies?

05-04-2003, 09:46 AM	#28
Sarah_Jayne Now with more Jayne Industry Role: Join Date: Dec 2002 Location: Los Angeles Posts: 40,077	yeah because a non-porn company has never proven not to be legitimate. ;)

05-04-2003, 09:56 AM	#30
SteveLightspeed Confirmed User Join Date: Jul 2001 Location: Lightspeedworld Posts: 7,940	I loved this statement about Ibill "To solicit business, the company is a fixture at such industry bacchanals as Internext, where its executives rub shoulders with porn stars and similar ilk." I'm positive I've never seen any Ibill exec getting his SHOULDERS rubbed at Internext... lol And who are they calling "similar ilk?" Next thing they'll start calling all of us PORNOGRAPHERS Steve Lightspeed __________________ Abra-cadabra!

05-04-2003, 10:00 AM	#31
KRL Entrepreneur Join Date: Oct 2002 Location: USA Posts: 31,429	Has anyone looked at the members sections on AVS sites recently? I just checked some out and most of them have 15 to 30 pics for their entire members section. Yeh, sure you're buying the network for your money, but individually its pretty lame. It's pathetic to say the least. If VISA takes a look inside any of these sites I bet a lot won't be approved. If they hit each site individually with the $750 per site, the AVS's will be gone. I know one webmaster who built up something like 2000 sites on AC and I doubt he'd fork over $1.5 Mil to VISA to register them all. This should be interesting. __________________ If you would like to develop your domains, you can lease inexpensive foreign labor from the leaders in the field at iWebmasters.com TO LOWER YOUR COSTS AND INCREASE YOUR PRODUCTION! * * * * * * * * * * * * Domains Adult News KRL's Newsletter Biz Tips Just Listed Domains

05-04-2003, 10:04 AM	#32
HeadPimp Bad Mo-Fo Industry Role: Join Date: Jul 2001 Location: Seattle, WA Posts: 2,772	My feeling is that Visa will crash sometime soon. They are becoming a bit too powerful and the Government needs to step in with some anti-trust action...

05-04-2003, 10:12 AM	#36
tony286 lurker Industry Role: Join Date: Aug 2002 Location: atlanta Posts: 57,021	I am for the fees on two levels, one it cleans up alot of the garbage no more kiddy sites. Secondly and I know this sounds terrible it thins out the herd.Too many people in the game because it costs nothing to get in, so I am for $750 for Visa and I hope MC start charging also so it costs $2200 to start a website it will slow down growth. Some say well there will be just more free porn not true someone who wants to make money, going free might be fun for alittle while but it will get played and they will disppear.

05-04-2003, 10:29 AM	#38
Steve Confirmed User Join Date: Feb 2001 Location: USA Posts: 6,894	hmmmm........$750 do say goodbye to a tremendous amount of competition? That's a fucking bargain. Even per URL. Shit, especially per URL. I'd bet 75% of AVS webmasters would throw in the towel at that point.

05-04-2003, 10:38 AM	#40
cherrylula lol Industry Role: Join Date: Jan 2002 Posts: 15,969	MORE FREE PORN!!!

05-04-2003, 11:03 AM	#44
assistant27 So Fucking Banned Join Date: Mar 2003 Posts: 256	hope visa hits them with some 5 digit fee and it should be annual fee it will give some breeze to porn industry.

05-04-2003, 11:08 AM	#46
evilpurple Registered User Join Date: Apr 2003 Location: UK Posts: 95	After thinking a bit more about it, this seems like it will really open the door wide open for more non-cc based alternative payment systems. It doesn't take much to set up systems to legally handle checks and direct bank transfers for a paypal like system in the largest markets. With online banking spreading, that might not be too inconvenient for users. Add to that that a banking license in certain offshore jurisdictions doesn't cost more than about $500.000, and that you can get your "own" turn key "bank" operating through someone elses bank license for about $50.000 and it doesn't take a genius to see that you can set up a fully legal bank, set up accounts in the UK, one of the Euro countries and the US and offer a Paypal like payment solution except for CC payments from the relative safety of an offshore company for realtive small change compared to the business potential. Wish I had the cash to set up something like that... If anyone would put up the money, I'd live to get involved on the IT side of things - the potential could be huge with the right people involved Ah, well... I'll do another startup soon enough. __________________ More traffic trades wanted (TGP, TGP2, CJ): http://www.evilpurple.com/trade/ Gallery submissions: http://www.evilpurple.com/submit.php

05-04-2003, 11:31 AM	#47
gigi Confirmed User Join Date: Apr 2001 Location: Vancouver, BC, Canada Posts: 691	Also, I don't think this will affect free AVS systems like SexKey or FNP.....so there is always that option for AVS webmasters to move their sites to a free system.... __________________ eMail ICQ: 32862272

05-04-2003, 02:17 PM	#48
tony286 lurker Industry Role: Join Date: Aug 2002 Location: atlanta Posts: 57,021	I dont think people who are looking to make money will embrace free. Also I think W is probably going to get four more years and people with free porn who live america are going to start going to jail. This will thin the herd and to tell you the truth it should been done a long time ago. This will greatly limit access to porn on online to kids and we have a chance at staying in business.