Just because PayPal is backing away from adult entertainment doesn't necessarily mean they're immune to other nosings around by the law - a federal attorney for Missouri claims the online payment processors violated the Patriot Act for doings with online gambling.
PayPal's owner, online auction king eBay, said in a March 31 statement that they got a letter from the U.S Attorney for the Eastern District that PayPal violated the Patriot Act when it handled payment processing for online gambling merchants between October 2001 and last July. PayPal may face giving up any of its earnings on those transactions as well as possible criminal liabilities, the U.S. Attorney's letter said.
But eBay said PayPal believed it did not violate the Act and that the actual amount of money it earned from the payment processing in question was far less than the letter suggested. The online auction kings told Dow Jones it could be harmed by negative publicity, litigation cost, and diverted management time, if they end up having to fight off civil or criminal charges in court.
PayPal - which actually stopped e-gambling processing last November - had been subpoenaed by a federal grand jury at the Eastern District's request last July, giving up documents and information about its services to online gambling, Dow Jones said.
