The Netflix Effect – PayPal Start Blocking Internet VPN Payments

One of the world’s largest online payment services, PayPay, has aided Netflix by ending its payment processing agreements with several Virtual Private Network (VPN) providers. But the move could have unintended consequences for secure financial connectivity.

Apparently PayPal’s reasoning for the move relates to its Acceptable Use Policy (AUP), which states that the service cannot 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” (i.e. copyright protection).

In a canned statement the company confirmed that “PayPal does not permit the use of its service for transactions that infringe copyrights or other proprietary rights.” Some have now linked (here) the move to Netflix’s recent clamp-down on VPNs (here).

The current copyright licensing model means that Netflix provides different content to different countries, although using a VPN allows the end-user to mask their real Internet Protocol (IP) address and adopt one from another country. Equally this means that VPN’s can also make it harder to track criminal activity, which would be another concern for PayPal.

However the Netflix link appears to be supported by the fact that PayPal started its campaign by targeting VPN provider UnoTelly, which some use specifically to avoid geographic Internet blocks. But it’s also a more general VPN service too and most such companies can be used to avoid at least some geo-blocking measures.

UnoTelly Statement

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.

As result, UnoTelly can no longer accept payment from PayPal. This development is outside of our control, and we sincerely apologize for the inconvenience.

If you believe in an open Internet and value the services UnoTelly is providing, we hope you would continue your subscription by updating your payment method from PayPal to credit card.

In many ways the current campaign against geo-blocking via VPN is perhaps the signature of a somewhat out-of-date copyright licensing model that still hasn’t been updated for the Internet age, but it’s one that content providers are often forced to respect.

However this is only part of the story because many people use VPN’s precisely to help keep their connections secure. For example, people who work remotely for a big business will often be given access to the network using a VPN connection.

Similarly if you need to access your bank / PayPal account while abroad and or on a public network, such as via WiFi hotspot or hotel network, then it’s often wise to use a secure / trusted VPN service to help protect your information. However we must emphasise the “trusted” part because it’s easy to forget that unscrupulous VPN providers could also be open to internal abuse.

In the meantime there are thousands of VPN providers around and so far PayPal only appears to have targeted a few, although that could soon grow. We should stress that this is not PayPal blocking VPN servers directly so much as PayPal stopping payment agreements with VPNs.