PayPal cuts off payments to right-wing extremists

Last Updated Aug 16, 2017 3:24 PM EDT

PayPal is taking action against more than three dozen hate groups and other extremist organizations, sources close to the payments company told CBS MoneyWatch on Wednesday. The move follows this weekend's violence at a white nationalist rally in Charlottesville, Virginia.

Among the groups PayPal (PYPL) will no longer do business with is Unity and Security for America, according to civil rights group Color of Change. Unity and Security for America is operated by activist Jason Kessler, an organizer of the "Unite the Right" rally in Charlottesville. PayPal is also cutting ties with Altright.com, a white nationalist group led by Richard Spencer.

"Regardless of the individual or organization in question, we work to ensure that our services are not used to accept payments or donations for activities that promote hate, violence or racial intolerance," PayPal said in a statement. 

Attempting to make donations to the groups PayPal is targeting now generates an error message saying, "This recipient is currently unable to receive money."

The move comes a day after the Southern Poverty Law Center argued that PayPal played an "integral" role in raising funds for white-supremacist groups. The advocacy group has urged PayPal to drop racist sites for three years, said Keegan Hankes, an analyst with the organization. 

A spokesman for PayPal said it has long sanctioned hate groups. In a statement on Tuesday denouncing the events in Charlottesville, which resulted in the deaths of three people and scores of injuries, the company noted that its "Acceptable Use" policy bars use of its service for activities that "promote hate, violence and racial tolerance." PayPal cited the Ku Klux Klan, white supremacists and Nazi groups in its statement.

Other payments companies are also moving to halt business with far-right groups. Discover Financial Services (DFS) told CBS MoneyWatch that it is terminating merchant agreements with hate groups, citing the "violence incited by their extremist views."     

"The intolerant and racist views of hate groups are inconsistent with our beliefs and practices," a Discover spokesman said in a statement.  

The moves by PayPal and Discover will raise pressure on Visa (V) an MasterCard (MA) to follow suit. An online petition calls on the credit cards, which take a commission on every payment they process, to quit doing business with racist groups.  

"The hundreds of thousands in transaction fees likely paid by hate groups to Master Card, Visa and the other companies are a drop in the bucket out of the tens of billions of dollars in revenue they earn every year," Color of Change said on its Blood Money website, launched Wednesday. The organization estimates that the payment firms are doing business with 100 such extremist groups. 

Color of Change executive director Rashad Robinson said his organization in recent months has held private talks with the credit card companies about distancing themselves from extremist groups, to no avail. He hopes that public pressure, including a petition that has garnered more than 77,000 signatures, will change that. 

"Most of what we heard them say is, while they share our values, they are not willing to make changes to their policies," Robinson said. "We will be seeing more rallies from white nationalist groups over the next several weekends. Folks will be traveling from city to city to wreak havoc on black communities, on Jewish communities on LGBT communities.... These companies have to stop enabling and supporting and making possible."

American Express American Express (AXP) has canceled acceptance of its card on the racist sites mentioned in Color of Change's petition, according to spokeswoman Molly Faust, declining to elaborate. The company's chief executive, Kenneth Chenault, is one of the few African-Americans to run a Fortune 500 company.

A spokesman for MasterCard told CBS MoneyWatch that the company in "no way supports or condones the hate-filled and intolerant views" promoted by the white nationalists who gathered in Charlottesville. But the company "generally" doesn't prohibit the acceptance of MasterCard cards by merchants whose views it doesn't support.

"We have, and will continue to actively monitor, the use of our network for sites and content that unlawfully promote or incite violence. If and when we are made aware of something that is illegal or in violation of our rules, we reach out to the merchant's bank to ensure the activity ceases," MasterCard spokesman Seth Eisen said in an email. "Additionally, we require that the merchant's bank conduct ongoing due diligence about their merchant customers."

Visa said that concerned organizations have flagged a number of websites over the past few months that they say promote prejudice, intolerance or violence, and that some of them have been cut off.

"Our financial institution clients are prohibited from submitting illegal transactions into the Visa payment system and, in working with them, it was determined that a number of these sites were not adhering to those financial institutions' acceptable use policies and/or were engaging in illegal activities," the company said. "For this reason, these sites are no longer able to accept Visa payments."

Like Mastercard, Visa doesn't restrict transactions for organizations that may espouse offensive views as long as they are operating legally.

Followig the Charlottesville attack, Alphabet's (GOOG) Google and GoDaddy (DDDY) canceled the domain registration for the neo-Nazi website The Daily Stormer. Discord, a voice and text app aimed at video gamers, pulled the plug on a server tied to Altright.com "and a number of accounts associated with the events in Charlottesville," it said.

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