Saying PayPal changed a policy that let its parent company monopolize adult material auctions on the Internet, RCI Internet Services - the cyberspace subsidiary of Rick's Cabaret - withdrew its antitrust suit against eBay, which has owned PayPal since 2002.
"After receiving RCI's lawsuit, eBay/PayPal agreed to change the policy that RCI alleged to be unlawful and will now refuse to process payments for any mature audience material including eBay sales," said RCI's attorney, Max Tribble of Susman, Godfrey, in a statement. "PayPal has taken a clear step back from its original position, which we believe was an attempt to eliminate competition and help eBay monopolize this segment of the online auction market."
The suit was withdrawn April 22. RCI had accused eBay of letting PayPal restrict payment processing on adult-oriented auctions to just those items sold through eBay's Mature Audiences section, as opposed to previously handling any and all adult-oriented auction site transaction payments - including through NaughtyBids.com, which Rick's Cabaret owns.
RCI filed the suit March 25 but never announced it - because, as Tribble told AVN Online, they believed their argument was strong enough that they wanted eBay to have the chance to look at the policy closer and see where it did or didn't match to the antitrust laws.
"We sent them a courtesy copy of our suit and they said, 'Look we're going to get right back to you, give us a little while,’" Tribble said by telephone from New York. "We thought that the policy they were trying to have PayPal enact was a clear violation of the antitrust laws, and we suspected there was a a strong chance they might agree to do what we wanted."
With approximately 84,000 adult-oriented items on auction, eBay's Mature section probably has an 80 percent share of the adult Internet auction market, Tribble said, with NaughtyBids.com the number two adult market share.
"Under the antitrust laws, if someone has monopoly power in a market, they can't use illegal or unfair means to squash competition and preserve monopoly power," he said. "Our vendors have been able to offer PayPal for years. eBay (bought) PayPal, put its own vice president in as the new head of PayPal, and then PayPal announced 'Oh, by the way, you have a new policy, you can't use PayPal to pay for adult items except on eBay.' In our view that was a totally unreasonable restraint on trade."
NaughtyBids.com auctions include adult videos, sex toys and devices, erotic clothing and lingerie, and clothes and other items autographed by adult entertainment stars. And they'll "provide a list of alternative ways for our customers to pay for mature material if they choose not to use their personal credit cards, money orders or checks," said Rick's Cabaret vice president Travis Reese in a statement.
Reese said RCI winning eBay's change of policy heart was one thing, but they - like many in the adult Internet - remain puzzled about why PayPal is backing away from adult entertainment payment processing. "It seems to us they are denying their customers a valuable and simple-to-use service," he said. "Fortunately, there are other options."
Dropping the eBay suit comes over a month after NaughtyBids.com launched a co-branded program for auctioning items from the Bunny Ranch, the famed brothel east of Carson City, Nevada. Available at both NaughtyBids.com and the Bunny Ranch's Website, the program uses the NaughtyBids.com platform and features auctions of such items as lingerie worn by Bunny Ranch girls, Bunny Ranch T-shirts, autographed photographs of Sunset Thomas showing off her breast enhancement surgery, and more.
Rick's had earlier bought out another adult auction site, EroticBid.com, probably best known for auctioning adult entertainment star Houston's surgically replaced labia and others among her items and souvenirs. The EroticBid.com deal was done a year before RCI withdrew its eBay suit.
