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Politics

DOJ's 'Operation Choke Point' May Be Root of Porn Star Bank Account Closings

Elizabeth Nolan Brown | 4.28.2014 8:40 PM

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Large image on homepages | Teagan Presley/Instagram
(Teagan Presley/Instagram)

Despite being in good financial standing, adult film performers and others in the porn industry have had bank accounts abruptly terminated—and the U.S. Department of Justice (DOJ) may have had something to do with it.

Under "Operation Choke Point," the DOJ and its allies are going after legal but subjectively undesirable business ventures by pressuring banks to terminate their bank accounts or refuse their business. The very premise is clearly chilling—the DOJ is coercing private businesses in an attempt to centrally engineer the American marketplace based on it's own politically biased moral judgements. Targeted business categories so far have included payday lenders, ammunition sales, dating services, purveyors of drug paraphernalia, and online gambling sites.

"Operation Chokepoint is flooding payments companies that provide processing service to those industries with subpoenas, civil investigative demands, and other burdensome and costly legal demands," wrote Jason Oxman, CEO of the Electronic Transactions Association, at The Hill.

The theory behind this enforcement program has superficial logic: increase the legal and compliance costs of serving certain disfavored merchant categories, and payments companies will simply stop providing service to such merchants. And it's working—payments companies across the country are cutting off service to categories of merchants that—although providing a legal service—are creating the potential for significant financial and reputational harm as law enforcement publicizes its activities.

Thus far, payday lenders have been the most frequent target. … And if payday lenders are today's target–what category will be next and who makes that decision?

I'm not sure who made the decision, but it seems the next big targeted category is the adult film industry. Last week, adult film actress Teagan Presley and an unknown number of others in the porn industry received notices that their Chase Bank accounts were being abruptly terminated.

Layton Benton/Twitter

"When Presley went to the bank in person to ask why, she was told it's because she's considered 'high risk,'" according to VICE News. VICE's Mary O'Hara was the first to note a likely link between the porn bank account closings and Operation Choke Point. The DOJ did not respond to VICE News' request for comment.

For years, various government initiatives have been aimed at reaching the "unbanked" and "underbanked." Federal officials claim to want to help these individuals avoid high fees and other downsides of nontraditional financial services, but it's hard not to suspect these efforts have at least as much to do with wanting a record of everyone's financial goings-on. If the unbanked were such a real concern, why would federal agencies be simultaneously encouraging banks to drop more customers?

Targeting porn performers or not, Operation Choke Point represents an incredible abuse of regulatory power. In a recent American Banker op-ed, former Federal Deposit Insurance Corp. Chairman William M. Isaac called it "a direct assault on the democratic system and free-market economy."

In a March 2013 hearing before a Senate Banking subcommittee, Sen. David Vitter (R-La.) pointed out the obvious: that DOJ has "no statutory authority" to be doing this. But why bother with statutory authority when you can just secretly strong-arm highly regulated businesses into doing what you want? I've never been much of a cryptocurrency evangelist myself, but I'm beginning to come around…

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NEXT: Tonight on The Independents: Donald Sterling Controversy, Rep. Darrell Issa, Rep. Jared Polis, Mike Baker, John Kerry's 'Apartheid,' Plus After-Show (Then Vape-in)

Elizabeth Nolan Brown is a senior editor at Reason.

PoliticsNanny StateBankingPornographyDepartment of Justice
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