PayPal vs. Smashwords

By Joe Moore

In February, PayPal, the global e-commerce payment service notified Smashwords, one of the biggest indie publishers or electronic literature that they had one week to remove all books in their catalogue that dealt with themes of rape, incest, bestiality and underage sex. Failure to do so meant that PayPal would deactivate their services. The pressure to take this action appeared to have come from the credit card companies that partner with PayPal (owned by eBay). Smashwords has over 100k books available online. A quick search of Smashwords showed that there were about 1k titles tagged with the offensive subjects.

Smashwords has been able to negotiate an extension of the deadline in order to come to some compromise with PayPal and its credit card, bank, and credit union partners. In the meantime, as this situation goes on, it raises many questions starting with:

Should a business such as a credit card company be allowed to force its moral beliefs directly or indirectly upon another company?

Before everyone starts pointing out the lack of redeeming literary qualities of the specific books targeted, let’s just move to the bigger topics of censorship and free speech—and who in this example has the right to decide when and how to implement it. Does a middle-man payment company like PayPal have the right to decide what is obscene? If PayPal can tell booksellers what they can and cannot sell, aren’t they also telling readers what they can and cannot read?

What’s your reaction to PayPal’s mandate? Is this just the start of bigger things to come in the censorship arena?