Payment Company's 'Prohibited' List Is Focus of Appellate Review

Payment Company's 'Prohibited' List Is Focus of Appellate Review
Rhett Pardon

SAN FRANCISCO — A federal appeals court last week heard oral arguments in a case that could prevent mobile payment company Square Inc. and other card processors from barring adult entertainment products and services from using their payment services.

A three-judge panel that heard the appeal in Robert White v. Square Inc. will decide whether Square Inc. acted illegally by discriminating against the plaintiff by his occupation — a bankruptcy attorney in a small law firm — by blocking him from its online payment platform.

Bankruptcy attorneys, along with 27 other occupations, products and services — including adult entertainment products and services — are listed on Square’s “refusal to service list.”

Square, according to its terms of service, prohibits the processing of numerous types of business transactions, including all adult entertainment-oriented products or services, "in any medium, whether it may be over the Internet, telephone or printed material."

"The White v. Square case presently before the 9th Circuit addresses whether persons excluded from accepting credit cards by non-bank entities such as Square Inc. may file class actions against such non-bank entities based, among other things, on their First Amendment rights to freedom of expression,” attorney William McGrane told XBIZ.

“There is reason to hope either the 9th Circuit or the California Supreme Court will conclude such class-action remedies are available to persons in the adult entertainment business so long as the activities such persons are engaged in are not illegal, i.e., that such activities do not involve prostitution, sex acts by minors, etc."

McGrane represents bankruptcy lawyer Robert White in an appeal of a lower court’s decision to toss the case.

White’s appellate counsel argued last week that the lower trial court erred in finding he couldn’t sue because he never signed up for the service.

His counsel said that White is protected under California’s Unruh Law, which makes it illegal for business establishments to intentionally and arbitrarily discriminate against customers.

Last week, the three-judge panel heard oral arguments and submitted the case for review. A video of oral arguments in Robert White v. Square Inc. can be viewed here at the 24-minute mark.