Is PayPal Softening Its Policy on Obscenity?

Ebay’s (NASDAQ:EBAY) PayPal has changed a controversial policy that would have restricted the use of its payment processing services by merchants selling e-books that might be considered obscene.

PayPal recently caused an outbreak of anger in the publishing world for its stance against e-books that contain “obscene” themes of rape, bestiality, and incest. PayPal went so far as to ask e-book distributors and publishers to ban those books and even threatened to “limit” companies’ PayPal accounts unless those obscene books were removed from their websites. The company has recently said that obscene content sometimes blurs the line between fiction and nonfiction, both of which “are problematic from a legal and risk perspective.”

On Tuesday, the company clarified how it planned to implement its policy after discussing the matter with affected merchants and other interested parties. PayPal elaborated that the policy will only apply to digital books that contain illegal images rather than text. PayPal will prohibit its use to vendors that sell e-books that contain child pornography or text and obscene images of rape, bestiality, or incest, as defined by the U.S. legal standard for obscenity.

PayPal plans to implement a system to screen for books that might violate the policy, which will apply to individual books and not entire genres. The system will allow the affected site operator or author to respond to and challenge a notice about an e-book violation. PayPal has refused to consider its move as a form of censorship, stating that as a payments company, the right to its service is different than that of the right to speak.

To contact the reporter on this story: Diallah Haidar at

To contact the editor responsible for this story: Damien Hoffman at