“Compliance issues” was the reason provided to Chanel Preston, American pornography actress and President of the Adult Performer Advocacy Committee, when LA’s City National Bank suddenly closed her bank account without warning.
“Moral reasons” was the response given to Marc Greenberg, former owner of pornographic studio MRG Entertainment, when he asked why he was refused loan underwriting services by JPMorgan Chase.
Amongst Eros members, the excuses from the “big four” banks in Australia have tended to focus on “reputation” and “standing” – with lending institutions apparently worried about the untarnished name of banks in a post-GFC age.
Whilst the relationship between financial institutions and the adult industry has always been frayed, there appears be an increased antagonism over recent years, with more businesses and individuals being denied loans and merchant services for their “disreputable” occupation.
What motivates current discriminatory practice is a question yet to be answered, with banks hiding behind vague terms rather than specific policies. However, lessons can certainly be learned from similar industry-level crackdowns overseas.
In the United States, the increased tension between adult businesses and financial institutions had a trigger point in an operation instituted by the US Justice Department in 2013. The operation, entitled “Operation Choke Point”, threatened to penalise financial lenders who provided supply to businesses deemed at high risk of money laundering and fraud.
In a foolish decision, which has since been reversed, the Federal Deposit Insurance Corporation, provided a memorandum labelling businesses involved in pornography, escort services and drug paraphernalia as being of particular ‘risk’ of Department of Justice penalties.
Financial institutions quickly took up the advice with PayPal, JPMorgan Chase, Visa/MasterCard, Square and various smaller institutions all refusing to provide services to anyone connected to the adult industry.
Although the Federal Deposit Insurance Corporation reversed its decision in 2015, the view that adult industry organisations were ‘risky business’ appears to have had a continued impact, with many US banks retaining clauses requiring more stringent assessments of adult businesses.
“The unfortunate result of Operation Choke Point is that it caused real business harm to legitimate businesses that were targeted by the initiative” noted Mia Hyun, a specialist in merchant banking facilities, “and banks are now petrified to make any changes to current memos”.
Has it Spread?
The extent to which US developments are playing a role in Australian discriminatory practices is less clear. But Eros is increasingly receiving reports from a diverse group of members, from adult retailers to vaping wholesalers, that are finding it increasingly difficult to access business loans, personal loans and merchant facilities.
The fact that the discrimination is occurring across product lines and financial services, rather than being limited to merchant facilities, goes against the often cited excuse that institutions are merely concerned about chargebacks from customers embarrassed by purchases.
Either current discrimination is the result of morality policing by large institutions or banks are looking to US developments and are concerned about industry broad crackdowns at home. Unfortunately, financial institutions are keeping their motives close to their chest – hiding behind “internal policies” that cannot be found on their websites and are not provided upon request.
Time to Act
Eros has already lodged a complaint with the ACT Human Rights Commission alleging current banking practices violate ACT protections against discrimination on the basis of occupation.
However, to mount a comprehensive campaign against the banks we need your stories. If you have been denied financial services as a result of working for an adult business, please get in touch.
In the United States a strong concerted campaign has led to hundreds of financial institutions reforming their internal policies to provide services to the industry. If we remain united, we can ensure that widespread institutional change can also happen at home.
Jarryd Bartle is a former lawyer turned adult industry consultant. He is assisting Eros in its continued campaign against adult industry discrimination.