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Paypal to Loosen Grip on Erotica Ban (Maybe)

The Paypal-Smashwords censorship saga took a new turn last night. After a long phone call on Monday, Paypal said that they might relax their ban and give authors more time to remove the content.

All this started late Friday night with an email. Smashwords founder Mark Coker was given an ultimatum by Paypal. Either remove certain types of erotica or Paypal would stop processing payments for Smashwords.

Naturally Mark had to pass this along to the authors and publishers who distribute through Smashwords; his email caused an incredible amount ruckus over the weekend, drawing the attention of TechCrunch, Slashdot, and other blogs as well as sparking a debate everywhere the topic was raised.

BTW, Paypal’s threats to Smashwords were just one of a larger crackdown on certain types of erotica. In the past couple weeks, several ebookstore which sold erotica, including Bookstrand and All Romance eBooks, have revised their policies. While it’s not clear that Paypal is involved in all the situations, I strongly suspect that Paypal has recently made similar demands to all the ebookstores.

But there is some good news for Smashwords. Mark sent out an email last night (end of the post). After the talk on Monday, Paypal is willing to reconsider the content they object to. It appears that Paypal has noticed the uproar over the weekend and might not be thrilled with the  negative publicity. So they are now willing to maybe allow works where the banned content is just mentioned, but not the central theme.

Why the revision? Well, over the weekend a number of people pointed out that Paypal’s ban would extend far beyond the reaches of this one genre. For example, it would include Woody Allen biography, history books, and even the Bible. There’s also a not so short list of works of literature which would fall under the banhammer as well (The Color Purple, I Know Why the Caged Bird Sings, just to name 2).

I’m not going to argue that Paypal’s actions are wrong; I did that in my last post. But I do want to point out what a slippery slope this was and how poorly conceived it was. Whoever initially came up with this ban didn’t look beyond their personal distaste for the topic.


As with the first email from Friday (archived here: ), you’re receiving this message because you have previously published erotica content at Smashwords under your account at[[username]] tied to your email address, [[user_email]]. Just because you’re receiving this email doesn’t mean your book or books are affected. Read on.

I’m writing to give you an update on where things stand. We are extending the deadline (previously set for tonight) for Smashwords authors/publishers/agents to voluntarily remove certain content (erotica featuring themes of rape, bestiality, incest) from Smashwords . I’ll communicate the new deadline in a future email once I gain new information.

I had another call with PayPal this morning. Our conversation is continuing with them as I seek to achieve a less onerous, more sensible result.

There’s a sliver of hope that I might be able to obtain a more positive, less restrictive outcome than I communicated on Friday, yet it’s unlikely we’ll achieve the true result I want (no censorship) in the near term. Today, PayPal hinted at a more relaxed definition of prohibited content as, according to them [I’m paraphrasing], "prohibited books would be those for which rape, bestiality and incest are the major theme. If rape, bestiality and incest are incidental plot points, then that content might be allowable."

This represents a significant clarification in our ongoing attempt to delineate the gray areas and push back the onerous, unfair and restrictive definitions as they now stand. It’s an opening, but it’s not the final word from PayPal. Our friends at PayPal are trying their their best to help Smashwords authors and publishers.

This potential relaxation doesn’t solve the broader issue of censorship. I think if a writer wants to write fiction around the theme of [anything], I think they should be able to write it if it’s legal.

Today’s progress, while encouraging, also opens up new gray area. How does one judge whether the taboo subjects are incidental instances or major themes? Where does one draw the line? The PayPal rep and I agreed our discussion will continue, and they assured me our PayPal services will not be cut off as we both work in good faith to advance the discussions.

A lot of people have been attacking Smashwords for my decision to comply with PayPal’s requirements. They’re pointing their arrows at the wrong target, and they’re not helping their cause. We’re working to effect positive long term change for the entire Smashwords community, and that includes all our erotica authors and readers. This change is possible only if we work together toward a common goal. When people spread lies that this is all part of a Smashwords plot to dispose of "icky books" (their words, not mine), or try to portray our actions as some sexist attack against women, or worse attacks I won’t repeat here, they’re wrong. Despite the ugliness shown to me and Smashwords over the weekend, I’m still working to protect these very people who attack us. The attackers don’t understand what we’re doing on their behalf behind the scenes, and even if they did understand I don’t expect them to agree with our approach. I’d rather work with PayPal in good faith than martyr the entire Smashwords community upon the stake of this impending deadline.

This is only the first chapter in this battle. Even if we fail in the short term we survive to fight another day. Regardless of the near term outcome, we will continue to engage to effect positive change with your help.

Over the weekend, many Smashwords authors and publishers demanded we abandon PayPal and find a new payment processor. It’s not so simple, and it doesn’t solve the greater problem hanging over everyone’s head. PayPal is trying to implement the requirements of credit card companies, banks and credit unions. This is where it’s all originating. These same requirements will eventually rain down upon every other payment processor. PayPal is trying to maintain their relationships with the credit card companies and banks, just as we want to maintain our relationship with PayPal. People who argue PayPal is the evil villain and we should drop them are missing the bigger picture. Should we give up on accepting credit cards forever? The answer is no. This goes beyond PayPal. Imagine the implications if credit card companies start going after the major ebook retailers who sell erotica?

My objective is for PayPal and Smashwords to pull the credit card companies into a more open discussion about these issues. I want all financial institutions to reevaluate their policies. I want the banks to change or clarify their policies toward something more enlightened. I want PayPal to loosen their policies. We need financial institutions to get out of the business of telling writers what they can write and what readers can read. Without this much-needed debate, the slippery slope gets more slippery for all indies.

Indie authors are the biggest publishers of erotica. Already, one retailer/distributor, Bookstrand, decided to drop all indies from their store. I can only assume they decided the angry authors were more trouble than they were worth. Our business is all about serving indie authors, so even if some segments of our author community are shooting arrows at us, we still want to help them work through this. The campaign at hand goes beyond erotica authors. It’s an indie issue. Indies are breaking the boundaries previously set by large traditional publishers. This boundary-breaking scares people. We should welcome the debate about what a "good book" should look like. I think a good book is anything legal that readers want to read, even if I don’t want to read it myself.

This campaign represents an incredible long shot. To move this forward, I need your help. Even if you don’t publish in the categories directly impacted by this crackdown, this campaign matters to you.

What can you do to move things forward? First, direct your attention where it matters most. Contact your credit card company or congressperson and tell them you want financial services companies out of the business of censoring what writers and readers are free to imagine with fiction. Blog about it. Tweet about it. Contact your favorite blogger and encourage them to raise awareness. Start petitions and tell financial institutions you want their censors out of your head. Contact the media. The media, with your urging, has the power to shine a bright light on the dangerous slipperly slope of censorship by financial institutions.

If the media (both traditional and social) calls on credit card companies and banks to honestly answer these simple questions, then they’ll either be compelled to acknowledge the absurdity of their policies or they’ll be compelled to rewrite their policies. This troublesome tide can shift if financial institutions are forced to answer why they’re prohibiting legal fiction.

I realize my message to you today cannot possibly answer all the questions you may have. Know that we’re working for all authors, even those likely to suffer from whatever ultimate changes we implement in the near term. We all want censors off our backs and out of our heads, and if that’s not the result we achieve, then we’ll at least work to get you more clearly defined rules. Bear with us.

I will post this message in the Smashwords Press room at so it’s archived.

Mark Coker


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Smashwords Succumbs to Censorship – The Digital Reader February 28, 2012 um 6:20 pm

[…] make the principle any less valid.Second Update (Tuesday night): Mark Coker has sent out a second email with a revised ultimatum from Paypal.EmailFebruary 24, 2012Re: Your Smashwords account at […]

the rodent February 28, 2012 um 6:58 pm

Thanks for posting this update. It’s useful.
> We need financial institutions to get out
> of the business of telling writers what they can
> write and what readers can read.

Yes, indeed. Nice to see it stated plainly. And nice to see the discussion continuing. Paypal is still wrong, but Smashwords is proceeding in the right direction…

Evil Wylie February 28, 2012 um 7:27 pm

Thanks for posting this update. I’m confused on one of Coker’s assertions, though, that this is a requirement of backdoor deals made with credit card companies. PayPal operated without these sorts of restrictions on adult content until they were purchased by eBay; it was only at that point that they adopted their terms of service prohibiting adult entertainment, guns, and other "objectionable" (but legal) transactions. I could be wrong about this, but that’s what certain parties have told me…

Evil Wylie February 28, 2012 um 7:38 pm

Actually, I did some digging and the info I had was correct: PayPal did not go "PG" until it was bought by eBay in 2003. An eBay spokesperson at the time cited high instances of fraud in adult entertainment transactions:

However, this contradicts Coker’s assertion that PayPal’s actions are motivated by pressure from credit card companies. The decision to not work with adult-oriented sites was a financial decision made by eBay, not by the credit card companies.

Nate Hoffelder February 28, 2012 um 8:48 pm

I don’t think that one is related. Paypal’s current position is too specific. They’re only objecting to certain types of erotica.

Evil Wylie February 29, 2012 um 2:10 am

Well, the one rep that Coker is talking to is interpreting their stance as being anti-specific acts. Another rep told author Selena Kitt BDSM wasn’t acceptable; other reps have terminated authors' accounts for vanilla sex acts. The issue as I see it is different people in their company have different interpretations of their own guidelines. Coker could get down in writing what they object to now, but in a year when a different rep at PayPal reinterprets their guidelines… I hope he’s seriously investigating alternatives (which do exist).

Brian February 29, 2012 um 3:09 am

The real issue isn’t necessarily why they’re doing it but that they are doing it. Paypal and the credit card companies are services provided to people so they can spend their money (ignoring those who shop on credit and find a way to pay later) and as such they should not have the ability to dictate what those shopping habits are. The law is in place to do that.

I found this article quite helpful because I was getting my information second hand and wasn’t are of a number of these factors. Thanks.

Xhara February 29, 2012 um 3:24 am

There is a petition too:

Florence February 29, 2012 um 11:27 am

I’m really curious about the idea that switching payment processors would only delay the inevitable. Paypal’s competitors largely already decline to process payments for 'adult content' when the person or company selling them doesn’t have a merchant account, and maybe that’s what Paypal means by the coming crackdown– maintaining extra infrastructure for payments is expensive.

Also, just a heads up, it looks like you repeated the contents of Mark’s email in your post by mistake.

Nate Hoffelder February 29, 2012 um 11:41 am

No, I added it on purpose. People tend not to click on links (in order to finish a story elsewhere), and I wanted it to be read.

Logan Kennelly February 29, 2012 um 3:03 pm

No, Florence is correct. The letter is included twice in the article. (Try searching for a phrase like "What can you do to move things forward" to see the duplicate content.)

Nate Hoffelder February 29, 2012 um 3:11 pm

Shoot. I misunderstood her comment.


Shae Connor February 29, 2012 um 10:59 pm

"PayPal is trying to implement the requirements of credit card companies, banks and credit unions."

This is where PayPal’s stated reasoning falls apart for me. Credit card companies, banks, and credit unions process payments for materials falling under one or more of the "banned" categories all the time. (Just look at the popularity of "barely legal" porn.) It might be a matter of differences between the way direct vs. PayPal payments are handled (e.g., chargebacks), but I doubt seriously that the content itself is the issue for the credit card companies. I think it’s more likely that PayPal is using that as an excuse.

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Trick Question: When is the Top Selling eBook in the Kindle Store not the Top Selling eBook? – The Digital Reader March 3, 2012 um 4:41 pm

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Ron Celano March 4, 2012 um 6:49 pm

I am going to assume PayPal is telling the truth when it says it is being pressured by the credit card companies. If so, then there is an underlying reason. See my conclusions here:

Rowena Cherry March 6, 2012 um 8:50 pm

And yet, even as PayPal prevents LEGAL sales, PayPal and EBay profit from illegal sales of the same books via EBay auctions that infringe copyright.

You can download the catalogue here

Pound to a penny some of those titles involve pseudo-rape (whatever that is) or sex with a werewolf or something else they censor when sold legally.


Phoenix August 29, 2012 um 8:25 pm

It truly frightens me when financial institutions use blackmail to control what we are allowed to even think about, daydream about, or even imagine. It is a very common fantasy amongst women to be raped. I’m not talking about brutal maiming and torturing, but simply being taken against their will. It comes from puritanical thinking that women are not supposed to initiate, nor enjoy, a good lusty roll in the hay with an attractive stranger. They are not supposed to have sex just because they are horny and that guy is hot. Oh no. They should only have sex when they are with a safe, long term partner that is the love of their life. I’m not saying we all want to experience every random daydream or fantasy that enters our heads. Sometimes we just want to imagine these things, not do them. I like to imagine what my life would have been like if I hadn’t gotten married and had 3 children. It doesn’t mean that I want to end my 40 year marriage and disown my kids. It’s just a case of the what ifs. How many women have fantasized having Fabio kidnap them, whisk them off to a private tropical island, and have his way with them over and over til they were done with him and then whisk them back home before the school bus brings the kids home? So what if I find the material offensive? I don’t have to read it! What’s next? Will they say that Christian writing is offensive to non- Christians, so we can’t allow any book to be written about it? This is the nose of the camel folks! And it’s all ready in the tent. I’m 58 years old, and I don’t read comic books any more cause I don’t like them. Did you get that PayPal? I don’t like them so I DON’T READ THEM. THAT’S THE ONLY CENSORSHIP WE NEED. Stop bullying people.

Brian November 20, 2012 um 6:19 pm

Dear Mark,
Bank of America is the premier payments processor in the country. They will happily take over Smashwords business from Paypal.

Wells Fargo will also take it. Smashwords has enough dollar volume that it makes sense.

Paypal accounts are for fledgling businesses. Time to take it to the next level.

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