Possibly under pressure from license holders, PayPal has suspended the account of VPN/SmartDNS provider UnoTelly, and other providers may be targeted soon.
While many users use VPN solutions for enhanced security, for example to protect themselves while using public Wi-Fi hotspots, one of the potential uses it to bypass geographic restrictions, something also known as geo-dodging. Hollywood and other license-holders have upped the pressure on content platforms such as Netflix to clamp-down
on geo-dodging, and it seems they are also applying additional pressure on payment providers to end their association with VPN providers.
UnoTelly announced on its blog
that PayPal has, with no prior warning, banned the provider from using PayPal as a payment provider.
"On February 3rd, 2016, PayPal has severed payment processing agreement unilaterally and without prior warning. PayPal indicated that UnoTelly is not allowed to provide services that enable open and unrestricted Internet access," posted UnoTelly on their blog.
Torrent news site TorrentFreak
allegedly obtained the email that PayPay sent to UnoTelly, which cited copyright concerns as the reason for the ban.
"Under the PayPal Acceptable Use Policy, PayPal may not be used to send or receive payments for items that infringe or violate any copyright, trademark, right of publicity or privacy, or any other proprietary right under the laws of any jurisdiction," the email read.
PayPal's latest move is controversial because it has not been established that geo-dodging is considered copyright infringement, while some countries, including Australia, specifically allow it in order to protect competition and consumer rights. It is also controversial because there are many completely legitimate, non geo-dodging uses.
For now, UnoTelly advises its users to switch from PayPal to credit cay payments, but PayPay's actions against VPN providers could have larger repercussions, with other payment providers, including credit card providers, very likely to follow suit.