MasterCard Execs Meet With APAG, FSC Over New Processing Rules

MasterCard Execs Meet With APAG, FSC Over New Processing Rules

LOS ANGELES — Executives from MasterCard held a meeting yesterday with representatives from adult performers union APAG and industry trade group Free Speech Coalition (FSC) to discuss the upcoming rule changes for credit card processing of adult content.

APAG board members Alana Evans, Ruby and Kelly Price presented their concerns to a group that included MasterCard’s Senior VP for Customer Engagement John Verdeschi, lawyer Mwanga Mtengule, VP of Brand Performance Jonathan Trivelas and Deputy Chief Security Officer Michael Lashlee.

FSC’s Director of Public Affairs Mike Stabile also participated in the Zoom meeting.

Verdeschi told the union and trade group reps that he was happy “to have the conversation” and to “have the opportunity to hear from you directly and to address some of your concerns.”

Verdeschi stressed throughout that it was absolutely “not the intention of the new rules to deter legal activity,” including consensually produced adult content.

The MasterCard exec also repeatedly stressed that he and the adult groups were “very much aligned” on the particular topic of removing non-consensual material from the internet.

XBIZ had exclusive access to notes from the meeting.

'We Do Not Intent to Stop' Legally Produced Content

Verdeschi first clarified that MasterCard does not deal directly with merchants. When he spoke of “our clients” he exclusively meant merchant banks, which then service the merchants themselves.

He described the new rules that will apply to adult content starting in October as “a set of standards that apply to our customer, the financial institution [merchant bank].”

The VP explained that these broad rules “ensure that we’re preventing illegal activity from happening” which he listed as “child pornography,” “child exploitation,” “revenge porn,” “situations where people clearly did not consent” and “rape.”

Verdeschi contrasted a situation involving “someone in 1995” versus 2021, where people can shoot and upload potentially illegal content immediately.

This shouldn’t be a “frictionless interaction,” he said. “There should be some rigor and some process that ensures that illegal content is not uploaded and then disseminated on a global basis.”

As for “movies that have been produced legally, we do not intend to stop that,” he added.

Powerful Investors and Anti-Porn Crusaders Lobbied for New Rules

Although this was the first time that MasterCard had met with the main adult organizations — the company did not consult with sex worker or adult industry groups when drafting the new rules — Verdeschi surprisingly revealed that he had been having conversations with “another set of adult performers” for a couple of months.

This unidentified group, he said, had “a different perspective: they were victimized. They had produced content where they felt that they did not provide consent, and that content had been distributed and they feel they have no recourse.” It is unclear who these performers are, or whether they are currently active in the industry.

It has recently been reported, however, that MasterCard did meet with Exodus Cry’s spokesperson Laila Mickelwait, the religiously-inspired anti-porn crusader, before drafting the new rules. Financial publication Institutional Investor revealed earlier this month that Mickelwait had for months “set up meetings with compliance executives at both Visa and MasterCard” during which she says her group “highlighted again and again the fact that there were these sexual crimes, sex trafficking, on the site, making it clear that they were profiting from that exploitation, enabling that exploitation.” But Mickelwait felt stonewalled by the credit card companies, which reportedly told her such matters were the responsibility of the banks.

This all changed after The New York Times’s Nicholas Kristof decided to platform and secularize Mickelwait’s religious campaign on December 4, 2020, with his sensationalist article “The Children of Pornhub.”

According to Institutional Investor, powerful investor Bill Ackman read Kristof’s piece, and took the matter into his own hands.

“He was friendly with MasterCard’s then-CEO Ajay Banga, whom he had met through a mutual friend,” Institutional Investor’s Michelle Celarier wrote. “Ackman texted Banga, providing a link to Kristof’s story with his tweet: ‘AmEx, Visa and MasterCard should immediately withhold payments or withdraw until this is fixed. PayPal has already done so.’ (Ackman was unaware that American Express already did not allow its card to be used on adult sites.)"

Pulling the Leverage

Mickelwait claims that, at the time, she “didn’t know who the hedge fund manager was, but she believes his outspokenness took the cause to another level.”

“He’s an unlikely advocate that you wouldn’t normally think of using his platform to push for that change, but I mean, look what that did,” she told Institutional Investor. “Bill pulled the leverage of the MasterCard relationship, and he called out Visa and Discover. And then, suddenly, there’s reaction from the card companies, and Pornhub deleted 80% of their website.”

“It just shows the power of finance, of financial pressure,” she gloated. “It wasn’t until Bill really laid on the pressure and said, ‘Do the right thing,’ that they did.”

Four months later, MasterCard “unveiled a new global standard for transactions with the porn industry that went beyond Pornhub,” the report continues, quoting none other than John Verdeschi, who said, “The banks that connect merchants to our network will need to certify that the seller of adult content has effective controls in place to monitor, block and, where necessary, take down all illegal content."

Institutional Investor called Verdeschi’s statement “the biggest victory yet” for Mickelwait’s campaign.

“MasterCard has now enabled this global policy that prohibits their card to be used on any adult site that does not verify age, consent and ID,” Mickelwait told the financial publication. “To me that’s so much more powerful than even the United States enacting such a law, because in that case it would only apply to the United States and then we’d have to enact that law in Canada, and in every country in the world.”

'There's Some Alignment'

At yesterday’s meeting, however, Verdeschi continued to claim the company was engaging on “all sides of the issue."

“We are not asking you to go back and renegotiate” contracts for old content or content featuring deceased performers, he said in response to a question from APAG’s Evans. “We are asking to deter illegal activity … [and] provide a strong foundation for legal activity. We are aligned. We are trying to ensure that performers have certain rights and that the merchants who are distributing have obligations to hear you out.”

“There’s some alignment,” he insisted.

Verdeschi also said the company is currently holding “education sessions” with the banks about the new rules. “There will be a training process that will happen right up to the October date,” he added.

Somewhat confusingly, Verdeschi described the credit card company as both “not law enforcement” and “conducting investigations,” then grew even vaguer when asked about the use of loaded terms like “trafficking” and “prostitution” in rules that will largely affect consensual adult content. He said MasterCard often receives “vague, very vague allegations of prostitution and trafficking” and they are “very careful not to overreact.”

“But we do know it happens, it exists,” he added. “We have engaged with constituents [sic] across law enforcement,” and “organizations like NCMEC [National Center for Missing & Exploited Children]. I want to assure you we do not overreact. We don’t take an allegation and run with it. We investigate.”

Overzealous Merchant Banks

Verdeschi also washed his hands of any “overreaction” or overzealousness by his clients, the merchant banks.

“Our customers are well-versed in this area,” he explained. “There’s a possibility that some will try to exit this space,” but “others will step in.”

Before the end of the Zoom meeting, FSC’s Mike Stabile tried to engage Verdeschi over the “moral panic from organizations like Exodus Cry/NCOSE, which are broadly anti-porn and are committed to taking down all adult content, legal or not.”

“They’re not honest as to what their actual goal is,” Stabile added. “How are the new rules going to mitigate that?”

“I can’t speak as to why certain companies [merchant banks] would overreact,” Verdeschi replied. “Since the whole Pornhub situation has been written about in the press, there’s ‘actions’ happening in that area,” he said, denying Stabile’s contention that MasterCard’s new rules are “the biggest driver for the banks’ over-censorship.”

“I can’t speak to that,“ Verdeschi said. “Our standards are only one of the drivers,” he protested, adding that regulatory rumblings at the political level and “press scrutiny” could also be responsible for the banks’ perceptions.

While Verdeschi may be correct that politics, recent headlines, and his company’s new rules are all influencing the banks, it is clear that all of these factors result from pressure exerted by the same source: Laila Mickelwait and her well-documented, ongoing crusade to eradicate all adult content from the internet.

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