Under pressure, MasterCard stops doing business with Backpage.com

CHICAGO -- Under pressure from the sheriff of the second largest county in the USA, MasterCard announced on Tuesday that it will cease doing business with the online classified portal Backpage.com.

The web site has long been the target of politicians and law enforcement officials, who charge that the site has provided a cloak of anonymity for pimps and provided unnecessary ease for johns who use the site to arrange meetings with prostitutes.

Despite the outrage, efforts to effectively shame or pass legislation to force the Texas-headquartered, Dutch-owned company to shut down its adult advertising have been unsuccessful.

Frustrated, Cook County Sheriff Tom Dart decided he would try to put pressure on the credit card companies, which are essential to Backpage's lifeline.

Dart wrote to the top executives of MasterCard and Visa on Monday and called on the credit card companies to cease processing transactions of adult services ads from the company. The web site also includes plenty of legitimate listings, from people looking to rent apartments, sell a car or advertise a job opening.

"MasterCard has rules that prohibit our cards from being used for illegal or brand-damaging activities," MasterCard spokesman Seth Eisen said in a statement. "When the activity is confirmed, we work with the merchant's bank to resolve the situation. Based on a request from the Cook County Sheriff's Office, we contacted Backpage's acquiring bank about the issue. They have advised us that they are terminating acceptance at this time."

American Express stopped doing business with Backpage earlier this year, said spokeswoman Sanette Chao. She declined to detail why the credit card company decided to end the relationship.

Visa did not immediately respond to requests for comment.

The web site, which is similar to Craigslist, has been under pressure from lawmakers and law enforcement for years to end adult services advertisements. Craigslist ceased posting adult and erotic service ads in 2010.

In April, Backpage published over 1.4 million adult services ads in the U.S., with the company bringing roughly $9 million in revenue per month through that channel, according to the Cook County Sheriff's Department.

Backpage accounted for about 70% of prostitution advertising among five Web sites that carry such ads in the United States, earning more than $22 million annually from prostitution ads, according to a 2012 estimate by AIM Group, a media research and consulting company.

Cook County Sheriff's Police say they have made more than 800 arrests since 2009 connected to Backpage adult service ads. Fifty of the arrests were for sex trafficking, involuntary servitude or promoting prostitution.

Dart argued that by taking away the ease of a credit card to advertise, often underage girls who have been forced into the situation, MasterCard and Visa can help reduce the number of victims.

"(I)nstitutions such as yours have the moral, social and legal right to step up on this pervasive problem and make a fundamental and everlasting difference," Dart wrote in the letter to MasterCard CEO Ajaypal Banga and the company's board of directors.

Earlier this year, a federal judge in Boston threw out a lawsuit against Backpage that alleged that the web site was designed to facilitate sex trafficking. Judge Richards Stearns ultimately agreed with the company's — and digital rights groups' — argument that under federal law Web service companies are immune from liability for crimes by users.

Liz McDougall, senior counsel for Backpage, declined to comment. Digital rights advocates, however, were critical of the tact that Dart took in going after Backpage.

"I really don't think this is the way we should be making law in this country," Rainey Reitman, activism director at the Electronic Frontier Foundation, which filed an amicus brief on behalf of Backpage in the Massachusetts case. "We shouldn't have informal pressure from public officials forcing financial service companies into deciding which types of speech should and shouldn't be allowed. MasterCard and Visa are not supposed to be the arbiters of free speech on the Internet."