Mar 13, 2012 3:15 PM PDT    Text size: 

NEW YORK — PayPal on Tuesday retracted its threat to close the accounts of online booksellers who sell works that could be considered obscene.

In mid-February, PayPal delivered an ultimatum to online booksellers and distributors, including Smashwords, BookStrand.com and eXcessica, giving them just days to remove all erotic books describing rape, incest and bestiality. More than 1,000 e-books were removed from the Smashwords website before PayPal agreed to postpone a final decision on cutting off payments.

“This decision recognizes the important principle that neither PayPal nor any other company involved in payment processing has any business telling people what they should read,” said Joan Bertin, executive director of the National Coalition Against Censorship (NCAC).

NCAC joined the American Booksellers Foundation for Free Expression (ABFFE) in writing a protest letter to eBay, the owner of PayPal.

“It is an important victory for free speech on the Internet,” ABFFE President Chris Finan said.

In a statement posted on its website today, PayPal announced that in the future it will not reject e-books that consist only of text unless they “contain child pornography, or ... text and obscene images of rape, bestiality or incest (as defined by the U.S. legal standard for obscenity…)."

PatPal committed to limit its objections to particular books rather than rejecting “entire classes." It also said that it is developing a process that will allow an author to challenge a PayPal notice that a book violates its policy.

The PayPal statement does not fully resolve all issues, however. It is not clear whether legal material would be affected by PayPal’s policy regarding “e-books that contain child pornography, some of which may be legal.”