The recent statement by US District Court Judge Cormac Carney decision regarding MindGeek is so pretentious in its severity that it forces us to consider what the Montreal-founded, Luxembourg-based company Really is, as opposed to what it purports to be. It’s not just a successful IT company, as MindGeek has long claimed. He is not just the owner of some of the most recognizable porn sites in the world.
For Carney, a nearly 20-year veteran of the US federal court system, MindGeek is nothing less than an “alleged known criminal entity” that engaged in a “sex trafficking enterprise,” distributing, promoting, and monetizing child pornography. on their various sites, very included Pornhub. And credit card giant Visa, Carney writes, has played a crucial role in MindGeek’s ability to do so. “Visa,” Carney wrote in a typically scathing passage, “lent MindGeek a much-needed tool, its payment network, with the alleged knowledge that there was a vast amount of monetized child pornography on MindGeek websites.”
Understanding how one of the world’s most recognizable brands ended up in court along with one of the most infamous purveyors of porn requires a bit of context. In December 2020, Serena Fleites was the subject of sons of pornhubone word out of 4,000 New York Times column detailing the dark side of a site that had long sold itself as a sex-positive online haven and zeitgeist with mainstream pretensions, attracting advertising dollars from companies like Kraft Heinz and Unilever.
Fleites had a sexually explicit video of her 14-year-old self posted on the site by her then-boyfriend. It took weeks for the site’s administrators to remove the video, by which time it had already been viewed hundreds of thousands of times and re-uploaded by other users, sending Fleites down a spiral of drugs and homelessness. She tried to commit suicide. Then another batch of videos of her, taken by a man who introduced her to heroin, hit MindGeek properties.
In July 2021, Fleites and 33 Jane Doe plaintiffs defendant MindGeek and Visa: the former because it posted the videos; the second because it provided payment services for advertisements that appeared alongside these videos. Visa sought to have the case dismissed the following October. Carney’s decision was a denial of parts of Visa’s motion, effectively keeping her in the case.
Perhaps the more pertinent question, however, is why? Why would Visa, with its US$446.9 billion market capitalization and world-class reputation dating back over 65 years, continue to do business with MindGeek, despite the obvious potential dangers and myriad signs of caveat?
The answer, of course, is money. That MindGeek earns a lot: US$187.5 million EBITDA in 2020, according to a pitch deck I saw last year – was certainly an attraction to partners willing to overlook the dangers of the business. Advertising portal owned by MindGeek TrafficJunky brags 150 million daily visitors and 4.6 billion daily impressions on MindGeek sites. That’s a lot of monetizable eyeballs.
But another factor makes those eyeballs even more valuable to credit card companies. MindGeek deals in pornography, one of the so-called “high-risk industries,” for which credit card companies can charge significantly higher merchant rates, apparently to offset the increased risk of fraud and chargebacks. Like their counterparts in the e-cigarette, debt collection, and gambling trade, it costs pornographers more money to take money from their clients.
“We’re talking orders of magnitude,” Ian Dawkins, director of Althing Consulting, a British Columbia-based cannabis industry consulting firm, told me. “As soon as it becomes a ‘high-risk transaction,’ a credit card company can justify all sorts of things, like a flat transaction fee, a higher percentage, a 60-day payment window instead of 30 days. Whatever I want to do as a finance company, I can justify it, because I call it high risk.”
The cannabis industry is instructive in this regard. At the start of legalization in 2018, marijuana dealers found themselves paying inordinate credit card fees, largely due to the perceived risk of selling the product, recalls the executive director of the Retail Cannabis Council of British Columbia, Jaclynn Pehota, who she is also a consultant for Althing. Since then, those rates have dropped as the weight of government regulation helped “de-risk” the industry. The same cannot be said for MindGeek stock in trading. “Porn is much less regulated than cannabis,” Pehota told me.
Suffice it to say that Visa and Mastercard were not completely cut off from MindGeek’s revenue stream in the wake of the New York Times part. Yes, they both stopped providing paid services to Pornhub. But they both continued to service TrafficJunky, although, like me discovered Last February, the portal allowed advertising campaigns targeting search words such as “13-year-old teenager”, “not 18”, “mother daughter” and various translations of the word “rape”.
I asked the two big credit card companies about it at the time. Elizabeth Scofield, Visa’s then-global director of brand protection, did not respond to my email. Mastercard Senior Vice President Seth Eisen told me the company would look into it. In both cases, the status quo has been maintained, at least until now.
Two weeks ago, when the Carney trial bounced around the web, I contacted both companies again, this time to ask how much they charged MindGeek for paid services. Visa once again did not respond, while Eisen sought to distance Mastercard from MindGeek and its advertising platform. “We do not have and did not have a contractual relationship with TrafficJunky. Any fees charged to TrafficJunky would have been on the acquirer,” he said in an email, referring to the bank that connects MindGeek to the Mastercard network.
It has taken the power of the courts to really change things, Fleites’ attorney, Michael Bowe, told me. “Our goal in the MindGeek-Visa case was to vindicate our clients, but also to transform the industry. There will be standards that will be required to ensure that the content is consensual,” he said.
In fact, Judge Carney points to how Visa potentially financed advertising campaigns focused on rape and sexual exploitation of minors. Six days after Carney’s decision, Visa Announced was no longer supported by TrafficJunky. Mastercard did the same on the same day.
Six days later, I created an ad campaign using the same harmful keywords on Traffic Factory, the advertising portal of Prague-based WGCZ, a rival of MindGeek and the company behind the XVideos and XNXX porn sites. Traffic Factory, which has access to 200 million daily visitors, still accept Visa and Mastercard.
Martin Patriquin is The logicQuebec correspondent. He joined in 2019 after 10 years as head of Maclean’s Quebec office. Winner of the National Magazine Award and SABEW, he has written for The New York Times, The Guardian, WalrusVice, BuzzFeed and The balloon and the mail, among others. He is also a panelist on CBC’s Power & Politics. @MartinPatriquin
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