Holding VISA accountable for processing illegal transactions!

Share on facebook
Share on twitter
Share on linkedin
Holding credit card companies accountable

Holding VISA accountable for processing illegal transactions!

EFRI always was convinced that payment companies like PAYVISION or Wirecard willingly and knowingly process illegal transactions for Cybercriminals are to be held accountable. The European supervisory authorities massively fail to do this job. So victims have to go legally against the fraud-enabling payment processors. EFRI supports victims that  filed already claims for victims against PAYVISION here in Austria for its cooperation with the Wolf of Sofia (Gal BARAK) and Uwe Lenhoff.   Meanwhile, we learned that a few days ago (as of July 29, 2022), a federal judge in California has issued a remarkable decision in a prominent U.S. case that could result in considerable effects also for our case.

The Pornhub Claim

About 100 Victims of Pornhub´s illegal activities are going legally against the beneficial owners of Pornhub (Mindgeek and others) and VISA for together monetizing videos of child rapes (Case 2:21-cv-04920-CJC-ADS). In specific, the lawsuit alleges that Visa via its bank agents (acquirers like PAYVISION and WIRECARD) recognized MindGeek as an authorized merchant and processed payments to its websites via numerous sham shell companies. The victims claim that VISA provided the payment system to monetize Pornhub´s business activities. As VISA via their acquirers (supervised payment institutions like Wirecard or PAYVISION) processed payments for these sites, it profited from MindGeek’s alleged sex trafficking enterprise.

VISA´s motion to dismiss

As of May 23, 2022, VISA moved to dismiss the case.

The arguments brought forward by VISA can be summarized as follows:

  • If VISA´s liability would be accepted, this would upend the financial and payment industries.
  • It would require payment networks to bear liability for the day-to-day conduct of individuals with whom they have no relationship and over whom they have absolutely no visibility or control.
  • Future plaintiffs could apply plaintiff’s reasoning to injuries caused by guns, prescription drugs, tobacco, soda, furs, and myriad other products. All on the theory that
    a VISA card was used somewhere along the way and that VISA should have somehow stopped conduct by unrelated actors.
  • VISA has no ability whatsoever to investigate the
    facts and circumstances of each of the billions of individual transactions it processes each day.
  • Credit cards serve as the primary engine of electronic commerce. So payment networks play an important role in the development of the internet. They could not play this role if they faced liability for criminal misconduct by completely unrelated individuals who somewhere along the way happened to benefit indirectly from a credit card transaction.

Furthermore, VISA argues:

  • VISA has no contractual relationship with MindGeek—any other MindGeek Defendant (beneficial owners of Pornhub) resp. with the victims or cardholders.
  • VISA facilitates billions of electronic transactions annually between financial institutions like banks.
  • VISA only enters into agreements with financial institutions—or for simplicity, banks—and establishes procedures for processing Visa-branded and non-Visa branded payment cards.
  • Termination of payment processing would not have prevented nor brought an end to the victims´ alleged injuries.
  • VISA engages directly with the Acquirer and Issuer banks. The Acquirers, in turn, contract with merchants. VISA imposes rules governing the types of merchants that Acquirers may contract with. But Acquirer banks initiate and maintain relationships with all merchants. Only Acquirers monitor merchant activity and ensure that merchants comply with VISA’s standards; among other things, VISA’s standards prohibit Acquirers from accepting payment from a merchant for any transaction that the Acquirer knows or should have known involves illegal activities or products.
  • VISA has no authority to control or edit the content on MindGeek’s websites and has no role in disseminating any content relating to the victims.
  • VISA argues that the facts in the Pornhub claim are not sufficient to establish that the VISA  knew or should have known about the trafficking of the victims in particular.
  • An alleged “general awareness” that MindGeek might have prohibited material on its websites is insufficient to establish knowledge.

The ruling of the judge

On July 29, Judge Cormac Carney of the U.S. District Court for the Central District of California held that the claim made had adequately alleged facts in the MindGeek case that VISA engaged in a criminal conspiracy with MindGeek to monetize child pornography.

Judge Carney held that the legal claim credibly alleged that “VISA knew that MindGeek’s websites were teeming with monetized child porn”; that there was a “criminal agreement to financially benefit from child porn that can be inferred from [VISA’s] decision to continue to recognize MindGeek as a merchant despite allegedly knowing that MindGeek monetized a substantial amount of child porn”; and that “the court can comfortably infer that VISA intended to help MindGeek monetize child porn” by “knowingly provid[ing] the tool used to complete the crime.” 

The Court, in fact, explicitly noted, “VISA lent to MindGeek a much-needed tool – its payment network – with the alleged knowledge that there was a wealth of monetized child porn on MindGeek’s websites,” and even went so far as to say “when MindGeek decides to monetize child porn, and VISA decides to continue to allow its payment network to be used for that goal despite knowledge of MindGeek’s monetization of child porn, it is entirely foreseeable that victims of child porn like Plaintiff will suffer the harms that Plaintiff alleges.” 

The Court also rejected VISA’s attempt to distance itself legally as merely a payment processor: “Here is VISA, standing at and controlling the valve, insisting that it cannot be blamed for the water spillage.”

The judge rejected the VISA motion and allowed discovery to proceed. A big victory for the victims.

Why do the victims assume that VISA participated in the venture?

Like in Europe in the US for entities pursuing their routine business performance to  become part of a criminal organization and to become liable the victims have to prove that

VISA

1) knowingly participated in the venture;

2) received a benefit from its participation;

and (3) knew or should have known that victims get harmed.

So the key to a successful claim of the Pornhub victims is to have evidence that VISA was aware – or must have been aware by massive hints – of the illegal activities of Pornhub.

Evidence for VISA knowingly processing illegal transactions

  • Common knowledge of the credit card companies and their member banks/financial institutions of the trafficking risk in the porn business since the beginning of online pornography industry (probably the reason why the porn business was classified as a high-risk business in the credit card business).
  • VISA and their member banks (like PAYVISION) are aware of actual instances of trafficking and CSAM/child pornography and red flags of such content from their due diligence and compliance functions.
  • Numerous alarming high-profile reports of obvious and indisputable trafficking on the Pornhub platform (Section 3 – 246 of the claim).
  • So Visa and its merchant banking partners (like Wirecard and PAYVISION) even continued to process payments for MindGeek partner channels after one of Pornhub´s most popular partner channels,  GirlsDoPorn, was indicted and then convicted for being a human trafficking venture.
  • Detailed reports to VISA/Mastercard from numerous anti-trafficking advocacy groups.
  • In April 2020, during a conference call with Elizabeth Scofield, the Director of Global Brand Protection for VISA, anti-sex trafficking advocates detailed how MindGeek was enabling and profiting from the rape and trafficking of women and children. After the call, Scofield requested written information that she could present to others at VISA, which was provided to her on April 30, 2020, in the form of a lengthy, detailed presentation detailing how VISA was participating in the exploitation of victims of sex trafficking through its partnership with MindGeek. VISA never responded further and elected instead to continue doing business with and benefiting from MindGeek’s trafficking venture.
  • Termination of relationships with Mindgeek by competitors and other business partners.

The legal claim outlines that taken together of these arguments, all of this would have informed even the densest inquisitor that MindGeek was intentionally engaged in commercializing non-consensual trafficked content. The credit card companies and their members providing merchant banking to MindGeek were not uniquely incapable of understanding all of this. On the contrary, they were uniquely capable, and in the the best position to understand this. And they did understand this. They simply chose to do business with MindGeek and benefit from its trafficking venture nevertheless.

Conclusions of the Pornhub claim´s lawyer

When VISA is found to have willingly and willfully via their agents (merchant banks) participated in the illicit activities of Pornhub, this will open up a floodgate of claims.

Mr. Michael J. Bowe a partner in charge of the Pornhub claim at Brown Rudnick is convinced “The Court’s holding that our detailed complaint adequately pleads Visa was engaged in a criminal conspiracy to monetize child porn means Visa and other credit card companies are finally going to face the civil and perhaps criminal consequences of this unconscionable and illegal activity.”

Our Take on the Pornhub claim

Hundreds of thousands of European victims of cyber trading scams transferred and are still transferring their life savings to the scammers via the VISA and Mastercard payment systems. The same principle as in the Pornhub legal case is applicable for the binary options scams. If VISA and Mastercard and its banking agents involved (companies like PAYVISION) have knowingly supported the scammers – as we are convinced – VISA resp. PAYVISION can be held accountable for the loss of being part of a criminal organization and have to refund all losses.

Our arguments in the legal claims against PAYVISION filed here in Austria are very similar to the claims made by the Pornhub victims against VISA. 

As VISA is outlining in great effort: the Acquirers are the ones to initiate and to maintain the relationship. PAYVISION acted as acquirer enabling binary option scammers like the Wolf of Sofia and several other TOC´s to accept credit/debit card payments.

Leave a Comment

Your email address will not be published.