PayPal makes file sharing check files. UPD: PayPal Official Application

Operators of German cloud hosting Seafile.de have published a message about the termination of accepting payments through PayPal. In connection with force majeure, all paid accounts are temporarily converted to free status.

Seafile.de was forced to take such an extraordinary step due to the fact that the PayPal payment system refused to provide services based on violation of the user agreement and the rules of the Acceptable Use Policy . The fact is that the hoster did not want to scan the traffic of its clients and check their files for the presence of illegal content .

Indeed, under the terms of PayPal for file-sharing services, it is stated that they must monitor and block access to illegal content.

According to the terms Acceptable Use Policy , file sharing services, as well as sellers of alcohol and tobacco must obtain prior special permission to use PayPal services. In the future, the payment system may refuse to provide services at any time without giving reasons.
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Seafile considered that the requirement of the payment operator to check user files violates German and European user data privacy laws, as well as being morally wrong. Therefore, they refused to comply with it.

This is how the situation developed.

The first notification of "violation of the terms of PayPal" hoster received on June 2. PayPal has sent a questionnaire with 16 questions regarding the details of the business plan, with many questions related to file sharing and torrent services. “We tried to answer these questions as best we could, and also tried to explain to PayPal that we are not engaged in file sharing or torrents, but provide file synchronization and file sharing services along the lines of Dropbox,” says the Seafile blog.

The German company made it clear that it does not monitor user data, and that such actions are in violation of German and European law.

Two weeks later, on June 14, an answer came. It said that in order to resolve the current “conflict”, Seafile should stop accepting payments through PayPal and remove all references to PayPal from its website.

To clarify the situation, Seafile's manager called PayPal and spoke with its representative. He expressed bewilderment situation. He agreed that if other cloud hosting companies like Dropbox use PayPal services, then there should be no problems here.

But the next day, another employee from PayPal’s brand risk management department called back and confirmed that the previous solution remains in force, that is, Seafile should stop accepting payments through PayPal and remove all references to PayPal from its website until June 19th.

Actually, that was done.

“They don’t care that other cloud hosting services work with PayPal. They don't even care that some of these services use Seafile. The decision is final and is not subject to revision, ”Seafile blog says.

Now Seafile is looking for another operator who could accept payments. As mentioned above, the hoster does not close paid accounts even with overdue payments, but instead temporarily made them free.

Seafile provides cloud-based hosting for storing and synchronizing files, like Dropbox and dozens of other companies. This story of the failure of PayPal to provide services leads to the conclusion that similar requirements for checking files are being extended to other cloud hosters who accept payments through PayPal.

It is known that the Dropbox service calculates an MD5 hash for each file in order not to store identical files multiple times. The company maintains a database of “forbidden” to distribute unlicensed files on the lists sent by copyright holders. As soon as the user tries to download a file with a matching MD5 hash from the “black list”, it is instantly registered. In this case, the user account can be blocked. The same thing is probably done by other cloud hosters.

To bypass the scan of files, you should encrypt them or simply archive them before uploading to cloud hosting. There is a possibility that Dropbox also checks the archives, so just in case it is better to set a password for the archive.

It turns out that PayPal in this case plays the role of a kind of "police", which checks the legality of the business of its customers. Obviously, this is not at all the concern of the payment system - to check what exactly other companies and their customers are doing. Probably, PayPal is forced to do so in accordance with the requirements of the regulator. Like banks, she is forced to work as a financial police and report on signs of various financial crimes.

By the way, PayPal can easily refuse service not only to firms, but also to individuals if their actions do not like companies, for example, they are suspected of fraud. In past years, users often complained that in this case the account is frozen, and the money is quite problematic to return.

Seafile is not the only hoster to whom PayPal has refused to provide services. A month ago, the same problem faced the owner of the Jumpshare service for collaboration and file sharing. On May 8, 2016, he also received a notice of violation of the terms of the User Agreement and Acceptable Use Policy with the requirement to remove any mention of PayPal from his site. The company did not disclose exactly which transactions and what exactly they are breaking. Before that, there were no warnings. PayPal did not respond to letters asking for clarification. The money in the account simply disappeared (the owner says that there was about 30% of monthly income).

As an alternative, the owner of Jumpshare recommends using the Stripe payment system, which also accepts payments from bank cards. In Europe, as an alternative, you can use Paymill and other operators.

UPD 23.06. PayPal today sent an official statement on this issue:

After additional study and verification of Seafile’s business operations, PayPal restored the company’s account. Ensuring the privacy of our users is at the core of PayPal’s business model, and we don’t require and never require sellers to invade the privacy of their customers. As a global payment platform, we must examine in detail all the information about the operation of any service - a PayPal customer, including, in accordance with PayPal's acceptable use policy, we monitor how carefully the company follows the laws and rules related to the exchange or distribution of illegal content. or content that infringes someone’s rights by processing bank card and transaction data. We analyze this data on a case-by-case basis. We regret the mistake made in the case of Seafile and apologize for any malfunctions and irregularities that could have occurred due to this.