LOS ANGELES—Wednesday, we wrote about the travails of soft-porn king Marc L. Greenberg at the duplicitous hands of JPMorgan Chase. We didn’t know the half of it. It turns out Greenberg is not the only individual to have been thwarted recently in otherwise run-of-the-mill banking because of the institution's reluctance to deal with members of the adult industry. CNBC reported today that adult performer Chanel Preston says she too has been discriminated against by a bank, and it sounds from the article as if there are others.
“Preston recently opened a business account with City National Bank in Los Angeles,” wrote Chris Morris for the network. “When she went to deposit checks into the account days later, however, she was told it had been shut down, due to ‘compliance issues.’
“She found the manager she had originally worked with and asked what had happened," reported Morris. "The bank, she was told, was worried about the webcam shows she had on her site and had revoked the account."
He added, “Preston is hardly the only porn star who has had trouble with the banking industry. Several performers and porn insiders (who were afraid to go on the record due to possible repercussions from their banks) said they have been denied accounts from a variety of financial institutions.”
Morris also spoke to the FDIC, which reported back that the banks can pretty much have carte blanche. According to spokesperson David Barr, "The decision to open or maintain an account is up to the individual institution. The rules are not prescriptive, which means that the bank must make its own assessment to determine the risks associated with an account and whether that account should be terminated or not opened in the first place."
Chanel told CNBC she had previously been denied a loan at a bank other than City National. "[The loan officer] asked me 'are you affiliated with the adult entertainment industry?' When I said yes, she said, 'We will not give you a loan," she said.
Needless to say, the relationship between banking institution and the adult “high risk” industry is long and strewn with previous breakups, making life uncertain and challenging especially for many online adult businesses. Not only banks, but the credit card companies change their policies regularly, often making site owners jump through hoops to bring their sites into compliance in order to avoid the ultimate penalty—the closure of an account. Finding a bank that will not only work with an adult business, but is willing to implement card association policies with humanity, is difficult, to be sure, but it certainly can be done.
But even for those with great relationships with their banks, there is no upside to speaking publicly about it. "The people within my [local] bank have urged me to downplay the nature of my business because corporate frowns on it," an industry veteran told Morris.
The fear of repercussions mentioned by the adult performers who spoke with CNBC is shared by our own contacts, whose only interest, after all, is to stay in business. The good news is that for a lot of people, as long as things stay low-key the good relationships can last a long time. The bad news is that some banks appear to be getting ever more skittish.
This story has been updated to clarify that Chanel Preston experienced two denials by two different banks, one earlier one for a loan and the more recent experience with City National Bank. We regret any inital confusion.