No AmEx for p9rn sites. Good or bad for business?
May 9, 2005 5:48 PM   Subscribe

Five years ago almost to the day, American Express decided to no longer cover credit card transactions from p9rn sites, claiming that business with such sites carried unacceptably high incidence of disputes about transactions.. Other credit card companies decided not to, ahem, pull out. Today, the AmEx decision still stands. After five years, can we say that American Express got... stiffed? Or were they right in the first place and the other companies got... screwed?
posted by matteo to Computers & Internet (20 answers total)

 
Response by poster: apparently VISA had a few problems, too, but decided to stay in the business.
posted by matteo at 5:51 PM on May 9, 2005


Well. I don't have any data to back this up, but I'd imagine that Amex's customers tend to be a little older, a little more conservative, a little more married, and overall a lot more unlikely to subscribe/buy porn online than Visa/MS/Discover card users. If taking this stand simply didn't mean loosing much business, well then 1) it wasn't much of a stand at all, and 2) it probably worked out for them.
posted by pwb503 at 6:03 PM on May 9, 2005


I would say the others learned how to handle the problems in a cost-effective manner that AmEx could not achieve.
posted by mischief at 6:03 PM on May 9, 2005


Response by poster: I would say the others learned how to handle the problems in a cost-effective manner that AmEx could not achieve.

maybe, but would that be so hard to figure out for AmEx too? Several other companies managed to do that and AmEx still cannot? doesn't make sense to me.
oh, and of course I called AmEx already but they aren't talking about this. with me, at least.
posted by matteo at 6:15 PM on May 9, 2005


[groans, rolls eyes at matteo, smacks forehead]

Hard question to get an answer to; the CC companies hate to let consumers know how much fraud they deal with.
posted by five fresh fish at 6:15 PM on May 9, 2005


People you actually pay for net-porn? noobs.
posted by jonmc at 6:19 PM on May 9, 2005


Response by poster: jon, that's another thing I'm incredibly curious about -- at least since Napster (when was that, 1998?) what's the point of actually subscribing to sites at the cost of, what's that, 20 dollars a month x 12 months, when there's all that smut freely available -- it's like paying for something that's already free. or, you can just rent a dvd.

anyway AmEx's behavior is very weird to me. It's absurd that they're the only one company that gets scammed so much it costs them money

posted by matteo at 6:26 PM on May 9, 2005


Purely speculation on my part and perhaps some ignorance, but doesn't AmEx operate under the pay-the-entire-balance-each-month-and-we-don't-charge-interest model?
posted by mischief at 6:44 PM on May 9, 2005


on, that's another thing I'm incredibly curious about -- at least since Napster (when was that, 1998?) what's the point of actually subscribing to sites at the cost of, what's that, 20 dollars a month x 12 months, when there's all that smut freely available -- it's like paying for something that's already free. or, you can just rent a dvd.

or just google image search wahtever it is that blows your hair back. I don't quite understand it either. maybe they want to feel like they're contributing to the economy or something.
posted by jonmc at 6:53 PM on May 9, 2005


doesn't AmEx operate under the pay-the-entire-balance-each-month-and-we-don't-charge-interest model?

Many of their corporate, small-business, and gold/green cards are indeed run that way; however, they are slowly creeping into revolving credit accounts to keep up with normal consumers.

Which is why I think that AMEX has not backed off its stance. Its primary business, IMHO, is probably corporate and small-business, instead of revolving accounts. Therefore, it's in the company's best interest to deal with reputable vendors who guarantee smooth transactions (since credit lines are much higher on AMEX cards).
posted by SeizeTheDay at 6:54 PM on May 9, 2005


mischief, i'm pretty sure that's how all credit cards work. (Well, at the very least my Mastercard, and my Visa work that way.)
posted by chunking express at 7:03 PM on May 9, 2005


Best answer: The fact that AmEx is, technically, a charge card is only part of this.

I think the main factor is that, until last year, AmEx was the only institution issuing its cards (MBNA does now, too). As noted they are a higher-income, higher-responsibility demographic, and disallowing adult sites is simply another way of enforcing that. For VISA and MC, individual banks issue the cards, which permits a much wider range of customer choice. There are exclusive issuers, and there are bottom-feeders. In some cases the latter even operate offshore, which can give them greater profit margins on marginal accounts. Since there was a heavy enough demand for porn vendors to have merchant accounts, a market sprung up to serve it. These banks also cover the higher risks of adult entertainment charges by charging higher transaction fees themselves, and keeping a higher reserve.

matteo: Don't confuse the easy availability of porn to the technically savvy with what's obtainable by the average consumer. Somebody's obviously paying for it, and at the very least that's because of the convenience of having all your spinster-nurse-from-Schenectady action in one place. But obviously many people use disposable accounts to suck down all a site's content and redistribute it. The heavy use of branding by these sites right on their content illustrates that they see this as a form of advertising (or at least are resigned to it).
posted by dhartung at 7:11 PM on May 9, 2005


Response by poster: thanks, dan
posted by matteo at 7:15 PM on May 9, 2005


chunking express: There is a distinction between paying your balance in full and not being charged interest and maintaining a balance on your credit card. Most American Express cards do not allow you to maintain a balance from month to month. As I said above, they are adding cards that allow revolving cards. I have both cards (high limit, must pay everything; medium limit, but can maintain a balance). Most (I say most because i can't be 100% sure that it's all) Visa and Mastercard are revolving credit cards, which means that you can keep a balance below your credit limit and pay interest on the balance.
posted by SeizeTheDay at 7:17 PM on May 9, 2005


I was under the impression that Amex has (or at one point had) no spending limit. So while your average mastercard could be appropriated and used to pay porn site fees (remember, we're *disputed* charges are the issue here; these usually result when someone swipes your card/number and goes on a spending spree), the bank ends up losing maybe a thousand bucks. But if the card in question is an Amex... then they could get billed for five times that amount. Yes?
posted by Clay201 at 10:37 PM on May 9, 2005


I was under the impression that Amex has (or at one point had) no spending limit.

Regular AmEx cards have spending limits.
posted by gentle at 7:08 AM on May 10, 2005


More accurately, the green card has no pre-set spending limit that they will share with you. Exactly what mystical methods are employed to determine what they will allow or not are not things they share with the cardholder.
posted by phearlez at 8:54 AM on May 10, 2005


they are adding cards that allow revolving [balance]

They've had these for some time, really. The Optima (their first revolving credit card) was introduced in 1987. Thanks, BrainBoost!
posted by kindall at 5:14 PM on May 10, 2005


As noted they are a higher-income, higher-responsibility demographic, and disallowing adult sites is simply another way of enforcing that.

It's worth mentioning, probably, that a huge number of AmEx cards are in fact corporate cards and/or are used almost exclusively by business expenses by individual employees. In fact I would wager that the majority of them are used for this purpose; I certainly can't imagine any reason to have one otherwise. To the company that pays the bill, not allowing them to be used to purchase pr0n is quite a feature.
posted by kindall at 5:17 PM on May 10, 2005


I was under the impression that Amex has (or at one point had) no spending limit.

No pre-set spending limit. You can see if a purchase will be approved on their website though, by entering the amount and type of purchase. I believe that they are more willing to let you spend money on travel than on consumer electronics, though I don't really know.

To the company that pays the bill, not allowing them to be used to purchase pr0n is quite a feature.

Corporate AMEX cards have the ability to restrict purchases by category.
posted by mosch at 10:27 AM on May 22, 2005


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