PayPal has blocked payments to Canadian VPN and Smart DNS provider UnoTelly, on grounds that the service might be used to bypass geoblocks, and therefore infringe copyright. In an email sent by PayPal, UnoTelly was informed that,
“We have recently reviewed your PayPal account activity, and determined that you are in violation of PayPal’s Acceptable Use Policy regarding your sales / offers on http://www.unotelly.com.
As a result, your account has been permanently limited and cannot be appealed.
Under the PayPal Acceptable Use Policy, PayPal may not be used to send or receive payments for items that infringe or violate any copyright, trademark, right of publicity or privacy, or any other proprietary right under the laws of any jurisdiction.
This includes transactions for any device or technological measure that descrambles a scrambled work, decrypts an encrypted work or otherwise avoids, bypasses, removes, deactivates or impairs a technological measure without the authority of the copyright owner.”
UnoTelly has made no bones in the past that the primary purpose of its service is to allow users to watch geo-blocked content, but the problem is that any VPN service, no matter how privacy and security focused, can be used for this purpose.
This raised fears that PayPal may clamp down on other VPN providers. Given that VPN is a vital tool for protecting internet users’ privacy and improving their security, this could have grave repercussions.
This fear has been heightened by what seems to be a climate of growing hostility by copyright holders to the use of VPN. Just recently, for example, both BBC iPlayer and Netflix started to ban VPN users from accessing their services.
UnoTelly expressed disappointment at the decision,
“We are disappointed at PayPal’s unilateral action and the way it acted without prior warning. We provide both DNS resolution and secure VPN services. Our services are network relays that connect people around the world.”
No other VPN services have yet been blocked, however, so it seems likely that PayPal is only targeting providers that specifically market themselves as “unblocking services”.
Customers can still pay for UnoTelly using credit cards, and UnoTelly is inviting suggestions for alternative payment methods (Bitcoin payment is not currently supported.) The focus of the website has also shifted away from unblocking content towards the privacy aspects of VPN.
In 2013 it also joined payment provider Payson in blocking block payments and freeze funds relating to iPreditor, a VPN service setup by Pirate Bay founder Peter Sunde (although the account was reinstated within a month).