Showing posts with label payment internediaries. Show all posts
Showing posts with label payment internediaries. Show all posts

Friday, October 28, 2011

Wikileaks and intermediary ethics : the tunnel at the end of the light?

Pangloss is amused in a schadenfreude-ish way to see two developments this week she sort of predicted in big ongoing stories about Wikileaks and online copyright enforcement (Newzbin).

Back in February this year (and indeed, earlier), I commented that one of the most unsettling aspects of the Wikileaks affair was the power it had highlighted of intermediaries not part of the traditional media communities - hosts like Amazon Web Services , domain name providers like EveryDNS.com and payment intermediaries like PayPal, Mastercard et al - to close down possibly legitimate speech. (I noted also however that for these corporations to do so is currently entirely legal - raising a debate about the nature of corporate social responsibility and what ethical duties media and non-media organisations should have in the soon to arrive post hard-copy newspaper world).

Events since - Assange's extradition, Anonymous arrests, fights with the Guardian and unauthorised half -autobiographies, Anonymous taking up closing down child porn sites - have rather obscured the fact that in fact, Wikileaks may or may not have been winning the PR war for the hearts of the technoproletariat but they were losing to those self same intermediaries, who were, understandably and quietly, more interested in avoiding legal liability risks than defending access to knowledge.

So this week, Wikileaks announced they were suspending publication and concentrating only on fundraising as 95% of their assets have vanished or become inaccessible. The faceless intermediaries have it seems won after all.

Dan Gillmor is unhappy about this.

"Suppose you are the proprietor of an information service. Your customers buy what you sell using the major payment systems such as Visa, MasterCard, Western Union and PayPal. The information you provide is greatly upsetting to powerful people who would prefer to keep it a secret. You have been charged with no crime, much less convicted of one. But one day, you discover that all of these payment systems – quite obviously responding to pressure from the government but citing no actual legal authority – are refusing to accept money from your customers on your behalf.
This, sadly, is not a supposition. It is nearly the precise situation that WikiLeaks has encountered since late last year, stripping most of the revenue away and now, as reported this week, forcing the whistleblowing media operation to suspend all activity except fundraising in a struggle merely to survive.
If this was happening to any traditional media company, it would be a scandal, and the media in general would be screaming about the threat to free speech it represented. While the news media are covering the WikiLeaks situation, they are not offering serious support in ways that matter to an organisation with which they have much more in common than not."
I can't go as far as Gillmor, though, who suggests payment organisations like Paypal or Visa be treated like "common carrier"s ie akin to telcos and postal services , with a duty to accept and pass on payments to any customer who presents themselves in return for limitation of liability as to what messages they carry.
The analogy to the phone company is simply not right here (and is also, it should be noted, legally out of date, but let that pass): the phone company accepts relatively little economic as opposed to publication risk that is not compensated by immunity from publisher's liability. By dealing with all willy nilly, anyone might default on their bill, true, but it would probably be uneconomic to try to spot potential poor payers & discriminate anyway.
On the other hand, banks (say) run the risk of severe loss if they deal with payers or payees who are likely to be fraudsters or otherwise default - their risk is not just of liability for becoming connected to illegal activities. Constraining banks , PayPal etc to deal with all without any discretion would probably lead to them reducing the services they offered to reduce risk - eg reducing consumer offerings, excluding certain territories - to no one's benefit. It would also likely considerably benefit organized crime.
It is certainly time though for a debate on online intermediary corporate ethics as well as law in Europe - perhaps to accompany the potential draft review of the E-Commerce Directive this November , or the FCO's upcoming launch of yet another set of Internet Principles at the major Cyberlaw conference in London this week (featuring Ms Internet Freedom herself, Hillary Clinton!). I look forward to it.

oh and Ps as for Newzbin (no 2), read Francis Davey's great summary here . Executive summary : we now have a working system of court injunctions to secure web blocking of sites assisting in copyright infringement in the UK. Regardless of whether this is good or not, there is clearly now no need for s 16 of the DEA to stay on the statute books.
The main point is costs. These, as Francis says look boring to everyone but a lawyer - but in fact here they are where the action is. Newzbin was an unusually easy case for Fox and the rest of the plaintiffs to win on the matter of primary liability (see my earlier post) - which made it also relatively easy for the court to decide that yes, ISPs really ought to block it. Other case, involving sites which have significant non infringing use, will almost certainly not be as easy.
But if an ISP stands its ground and loses and then appeals, and still loses, as BT did, then the ISP now (it seems) pays. This is somehat different from the approach taken in Totalise v Motley Fool concerning whether an ISP should pay for its costs if opposing a Norwich Pharmacal order, and it is, in my view, the wrong decision. Why is it reasonable to demand the scrutiny of a court (para 53-4) but not to pursue an appeal if the ISP feels the instant court was wrong??
To date UK ISPs have resisted blocking on request (see Vaizey's talks in the summer on a secret council for voluntary ISP copyright blocking). Will they continue to demand a court order under the precedent Newzbin No 2 now sets? Or will they throw in the towel on the assumption the first court order will be a forgone conclusion and appeal too risky? I hope this latter is not what we see. Requests for blocking (see below) are so far getting fair bit of publicity at least in the geek press: but if they become more common such transparency will probably fade. (Anyone for hosting a Chilling Effects- type UK Block Requests Clearinghouse site?)

UPDATE 9/11/11 : Since writing this, plaintiff rightsholders have apparently demanded BT now block the Pirate Bay. Interestingly this is significantly different from Newzbin in that there is no existing finding of primary liability for copyright infringement. We are yet to see if BT will obtain a court order, though they say thay plan to before undertaking any blocking.
Most recently, Virgin and Talk Talk have also been asked to block Newzbin2. Again, it is not yet clear if they will see a court order though Virgin has gone further still & said they would like to see a quid pro quo for blocking of access to lawful content guarantees (Virgin of course have a notoriously long history of being stymied by rightsholders in their attempts to offer legal flatrate P2P.) Watch this space..

Tuesday, May 22, 2007

AllOfMP3.com declared fraudulent

Interesting story - the IFPI raid an agent of AllOfMP3.com, the infamous Russian-based illegal download service, in London.

"The individual was allegedly the UK-based European agent for allofmp3.com, facilitating the sale of digital downloads by advertising and selling vouchers through auction sites such as eBay and the website allofmp3vouchers.co.uk. That website has now been taken down from the internet. The vouchers contained a code that allowed UK and European consumers to access and download music illegally from the allofmp3.com website.

Charging £10 per voucher, the suspect was believed to be taking payment from European customers and transferring the cash into various offshore accounts operated by the site's Russian owners.

Metropolitan Police officers seized computer equipment and paperwork for further investigation. Early indications suggest the pirate operation may have generated criminal proceeds for the Russian website running into tens of thousands of pounds."

It is worth noting that the police executed the raid not under copyright law per se, but under Section 2 of the Fraud Act 2006 - legislation introduced into UK law in January 2007 specifically to combat online fraud. IPRED 2 was *not* involved. The 2006 Act makes it a criminal offense to dishonestly make a false representation for gain. A fales representation is one that is untrue or misleading and the person making it knows this. This is reportedly the first time the new fraud legislation has been used in a copyright-related case.

Interesting on two counts therefore. First, this is a good example of how even operating in a law haven like Rusia cannot necessarily save your business model in more lawful jurisdictions, when payment intermediaries are squeezed - Visa, Mastercard and even PayPal had ceased "laundering" payments to AllOfMP3.com from the UK making it almost unuseable by the average UK punter. (One wonders about Google Checkout?) . Similar strategies have been adopted successfully by the US to throttle online offshore gambling services offered to US nationals by countries like Antigua.

The legal liability of these payment intermediaries for providing funds access to AllOfMP3.com of course remains untested, as far as Pangloss knows. Would they be secondary infringers in UK copyright law, or "inducers" of copyright infringement in the US, a la Grokster? This must be the fear , but it would be nice to have had it judicially examined.

Secondly, the 2006 Fraud Act provisions were, it was thought, introduced to deal more effectively with "phishing", not copyright infringement - but it seems they have now been appropriated to that context. In Scotland where the 2006 Act does not operate, it is likely the existing common law of fraud would cover similar action. Is it fraud to take money in exchange for illegal services? One might argue that the punters were not being defrauded as they were getting exactly what they asked for , namely, downloads of music. Compare phishing where there is clear deception. The police/BPI argument would be that the punters are being deceived that what they are buying is legal in the UK. That, to Pangloss, seems in itself, rather deceptive:-)