DOJ Morality Police May Be Behind Chase Closing Bank Accounts Of Adult Film Actors

from the choke-on-this-point dept

The Techdirt comments section is to thank for this one. After we just talked about Chase Bank appearing to close the personal bank accounts of a bunch of employees in the adult performing business, a few of you pointed us to reports that this may just be Chase Bank dancing to a federal piper. That report has expanded upon Teagan Presley, a former porn star, and her comments upon finding out she was suddenly no longer a Chase customer.

When Presley went to the bank in person to ask why, she was told it's because she's considered "high risk."

"And then they told me that they canceled my husband’s account too, because our social security numbers are linked," Presley told VICE News. "They told him that it was because I'm a notorious adult star. Which is funny, because I'm kind of a goody-goody in the business, and I'm not even doing porn anymore."

So, the obvious question to ask next is what makes her "high risk"? After all, Chase Bank really likes money, even when it is generated by doing some pretty crappy things, so what's the deal? Well, the latest is that this may be a part of the US Department of Justice's "Operation Choke Point" program, in which the government has apparently decided that some extremely legal businesses don't get to exist anymore, but since they can't just disappear companies and industries in good standing, they've decided to route around the whole "freedom" thing and get the financial industry to act as contract hitmen.

In a Wall Street Journal op-ed Thursday, American Bankers Association CEO Frank Keating wrote that the Justice Department is "telling bankers to behave like policemen and judges."

"Operation Choke Point is asking banks to identify customers who may be breaking the law or simply doing something government officials don't like," Keating wrote. "Banks must then "choke off" those customers' access to financial services, shutting down their accounts."

Keating said the highly secretive operation was launched in early 2013. That's when porn stars started to complain to the media that their bank accounts were being shut down without explanation.

Let's not mince words: a program that was built upon the goals of stopping financial fraud has devolved into a massive government overreach into private businesses that are operating within the law. The way it works is that the DOJ informs financial institutions that certain industries are more likely than others to be involved in unauthorized charges of consumer credit and bank cards. They likewise inform the banks that the DOJ is going to keep a special super-awesome close-eye on these industries, with the implication being that there will be a great deal of prosecutorial action, subpoenas, and scrutiny on those industries, not mention penalties on the institutions that work with them. The intention of the government, it would seem, is to make the banks unwilling to deal with the government harassment and simply cut anyone in those industries off from the financial institutions. Nobody is happy about this.

Even the former chairman of the FDIC, William Isaac, wrote in American Banker magazine this week that Operation Choke Point is "way out of control," adding that 23 bipartisan members of Congress wrote a letter to the DOJ stating that the operation is driving legal business into the ground. That includes banks themselves.

Camden Fine, president of the Independent Community Bankers of America, wrote a letter to the Justice Department in early April, saying that Operation Choke Point makes it too tough for small community banks to compete with the big chains.

It's worse than that. The federal government is lording over legal industries operating within their respective states' laws and single-handedly directing banking institutions to cut their legs out from beneath them. It would be bad enough if we were just talking about business accounts, but personal accounts are getting swept up in this as well. That's how you end up with individual performers in the adult film industry suddenly finding themselves unable to open up a bank account. This is done, by the way, in the name of morality. It represents a violation of a free and legal marketplace by a government that has as much moral authority as can fit in a thimble.

And, no, it isn't just the porn industry we're talking about.

In 2011, the FDIC listed 30 "merchant categories that have been associated with high-risk activity," likening pornography to Ponzi schemes, racist materials, "lifetime guarantees," and sales of fireworks and tobacco. At a March hearing before a Senate Banking subcommittee, the Washington Post reported, Senator David Vitter (R-La.) said "there is a determined effort, from [the Justice Department] to the regulators... to cut off credit and use other tactics to force [payday lenders] out of business. I find that deeply troubling because it has no statutory basis, no statutory authority."

This should be terrifying to business owners in every industry. Sure, this time they're going after some companies that you may not like, be they porn, or payday lenders, or people making racist materials, tobacco, or fireworks. But if those industries are operating within the law, they have the right to exist. The law is the only measure by which the DOJ should be invoking banking policy. The federal government doesn't get to pick and choose which businesses exist outside of their legality. If the federal government wants to make porn illegal, they should try to do so. They won't get very far, but they should try. This underhanded attack on free enterprise is simply un-American.

Filed Under: adult film stars, banks, doj, government pressure, morality, operation choke point, porn stars
Companies: chase bank, jpmorgan chase

Chase Bank Slutshames Their Adult Performer Customers

from the which-of-them-is-more-dirty? dept

Porn. It's what the internet is for, as they say. Also, it's very hard for some people to avoid. Entire governments, too. But what about the little people with big parts that make all this wonderfully ubiquitous smut possible? It's easy to forget about the hard (ahem) working individuals that make these small businesses and big industry spurt out their wares like (insert grossest applicable analogy here). And now it's apparently difficult for those mostly-young laborers to get paid, since some banks seem to have adopted a rather convenient moral code when it comes to who can open accounts with their institutions.

Chase Bank has reportedly sent out letters to hundreds of porn stars notifying them that their accounts would be closed on May 11. Teagan Presley confirmed to XBIZ that her personal account was one of the ones shut down.

“I got a letter and it was like please cancel all transactions, please fix your automatic pay account and make sure everything’s taken care of by May 11,” Presley told XBIZ. “I called them and they told me that because I am, I guess, public and am recognizable in the adult business, they’re closing my account. Even though I don’t use my account, it’s my personal account that I’ve had since I was 18, when it was Washington Mutual before Chase bought them out.”

In other words, Chase Bank is slutshaming adult performers and closing their personal accounts, whether those accounts are associated with the adult businesses in question or not. It's apparently something of a morality play. That may find some support with the more conservative and/or religious factions in America, but I'd say it's an interesting move by the same bank that has, among other transgressions: financed the Nazis, engaged in fictitious trades, wrongfully foreclosed on active US soldiers, financed other Nazis, bankrupted American towns through changes in their debt-rate programs, violated the Sherman Act, refused to return funds to Jewish families that were victims of those same Nazis they financed, lied to people trying to finance automobiles, and financed the damned Nazis. To invoke a morality clause with all of that on one's resume would be a bit like having Donald Sterling fire an employee for being racist.

Unfortunately, because the banking industry appears to have rules all its own, it's unclear whether anything can be done about this kind of blatant discriminatory policy.

Adult industry attorney Michael Fattorosi told XBIZ that Chase and other banks have “notoriously closed adult accounts or people in the industry’s accounts, but nothing like this.”

Whether legal recourse for those whose accounts were nixed is plausible — and, if so, which path is optimal — remains unclear, given that the situation is novel and that banks generally have the prerogative to do business with who they choose (yes, that often means flagrant discrimination).

And, yes, private businesses can choose with whom they do business, but I would suggest that if Chase wants to apply morality to their business, we should as well. That would mean they need to be paying far greater repercussions for their transgressions than the wrist-slapping they've experienced thus far.

Filed Under: adult film stars, bank accounts, morality, porn
Companies: chase bank, jpmorgan chase