PayPal freezes VPN provider's account, spooked by BitTorrent

TorGuard, a VPN service provider, was recently given the cold shoulder by PayPal for providing BitTorrent-related services. Upon discovery of TorGuard's relationship with BitTorrent, PayPal abruptly froze the company's account, preventing the virtual network provider from sending or receiving payments through PayPal's service.

TorGuard received this vaguely-written e-mail notifying the company that it had violated PayPal's terms of service agreement.

When we reviewed your account, we noticed that your activity violates some of the agreements you have with us. Because of this, we’ve limited your accounts and can no longer offer our services to you. You’ll still be able to log in to view your transaction history, but you won’t be able to send or receive money.

Source: torrentfreak.com, PayPal support

Concerned about the potential disruption and not knowing exactly what rules TorGuard was breaking, the company's owner called PayPal to resolve the issue. A PayPal business account representative informed him that PayPal does not allow the promotion of torrent trackers. The owner confronted the support representative and explained that TorGuard is a type of hosting service, not a tracker or a company that promotes trackers. The PayPal employee said the decision had already been made and there was nothing further which could be done.

PayPal's reluctance to work with TorGuard is likely due to the cloud of requests and lawsuits which surround BitTorrent-related services which leverage PayPal to monetize their operations. Copyright holders have worked with PayPal in the past in order to identify website operators who are suspected of violating intellectual property rights. Additionally, the company routinely shuts off funding to such operations entirely.

PayPal is well-known for suspending accounts which engage in questionable activity. However, sometimes, the online payment service drops accounts which aren't so questionable. Markus Persson, Minecraft's creator, knows this first hand as well as Regestry, a company who utilized PayPal to collect donations for purchasing children's toys to give away for charity. PayPal suspended Regestry's account because, effectively, charity is not a "worthy cause".

TorGuard's owner seems mostly undaunted by the setback, however. Although the exclusion of PayPal payments may not necessarily be a good thing, he said that the site still accepts credit cards, pre-paid cards, Google Checkout and various other services.

ISPs cannot be forced to filter users' internet traffic

It has been a little under a month since British Telecom's ISP division was ordered by UK Courts to block all access to usenet-aggregating site Newzbin2. In a fresh counterblow to media piracy mongrels, an European court has ruled quite the opposite, saying those using the internet should not be subjected to any service restrictions.

The ruling was in respect to the long-running case between Belgium ISP Scarlet, and the Rights Holder management company SABAM. With the latter accusing the ISP of allowing its internet customers to use p2p file sharing websites and services to illegally download its catalogs from the internet. Initially the Brussels Court of First Instance ruled that Scarlet should make it impossible for its users to send or receive in any way, any electronic files containing SABAM's musical works.

Scarlet appealed the ruling, arguing that in order to comply with the courts request it would be required to actively monitor every customer's internet traffic, at considerable cost, and in the process breaking laws pertaining to its user's rights to privacy.

More specifically, the Court of Justice for the European Union ruled (PDF) that it was illegal for any ISP to install or maintain any system filtering all of its traffic as it would very likely infringe an individual's privacy rights. The financial burden was also a consideration in the verdict, with the Court stating that such measures would have an unreasonable impact on the ISPs financial standing. Here's an abstract from the ruling:

"The filtering system would also be liable to infringe the fundamental rights of its customers, namely their right to protection of their personal data and their right to receive or impart information, which are rights safeguarded by the Charter of Fundamental Rights of the EU. It is common ground, first, that the injunction would involve a systematic analysis of all content and the collection and identification of users' IP addresses from which unlawful content on the network is sent. Those addresses are protected personal data. Secondly, the injunction could potentially undermine freedom of information since that system might not distinguish adequately between unlawful content and lawful content, with the result that its introduction could lead to the blocking of lawful communications."

"Consequently, the Court finds that, in adopting the injunction requiring Scarlet to install such a filtering system, the national court would not be respecting the requirement that a fair balance be struck between the right to intellectual property, on the one hand, and the freedom to conduct business, the right to protection of personal data and the right to receive or impart information, on the other."

In a statement to the ISP Review website, the London Internet Exchange said that as victories for ISPs in the copyright wars go, this one was comprehensive, and will be seen as a landmark ruling for years to come.

On the other side of the pond just two days ago the BSA, comprising of giants such as Microsoft, Apple and Intel, among others, withdrew their support of the hotly debated proposed Stop Piracy Online Act amid concerns that important questions had been raised and needed answering.