Adult Entertainment Can Be Hard To Bank On – Literally
MELBOURNE – In October of last year, the Eros Association, Australia’s leading and longest-running adult industry trade group, released a report examining alleged financial discrimination against the Australian adult businesses which comprise Eros’ membership.
For many American members of the adult entertainment industry, the stories related by the merchants surveyed for the Eros report of their negative experiences with Australian banks will ring all too familiar.
“After having been a customer [with this bank] for over 20 years and them providing me with merchant facilities for adult shops last night I received a phone call after 6pm telling me that my merchant services were going to be turned off today,” one of the business owners surveyed by Eros reported. “Sure enough, at 1pm they pulled the plug leaving me with four retail stores, 5 online retail sites and our wholesale without credit card transaction facilities. No letter, no notice.”
Other merchants encountered difficulty early on in newly-established banking relationships; after being initially approved for accounts, they would find themselves subsequently denied key services which rendered those accounts almost useless to them.
“[We were rejected] simply for being in an adult industry,” reported another adult business owner quoted anonymously in the Eros report. “We were totally upfront with them right from the beginning and I asked their rep to not waste our time in making us think we had a chance as I didn’t want to go through the application process only to be denied at the last minute, as had been the previous case with another bank.”
Whatever assurances the merchant might have received during their initial meeting with the new bank, what they later found was this bank was unwilling to provide them with all the services they needed, just like their previous bank.
“What eventually happened was identical with what happened with the other bank,” the Eros survey respondent added. “We established bank accounts and were granted an EFTPOS facility, but then denied the Internet Merchant facility.”
While there are many parallels here between the experiences of Australian adult business owners and entrepreneurs and what some Americans have experienced (regardless of whether those Americans’ experiences were related to “Operation Choke Point,” as many believe they were), there’s one major difference between the two situations which immediately sticks out: The complaints of Eros and the merchants it represents seem to be gaining some actual traction outside the adult industry.
“It’s a bit rich for the banks to decide which industries are moral and which aren’t,” said Kate Carnell of the Australian Small Business and Family Enterprise Ombudsman (ASBFEO).
“There are an estimated 25,000 people employed in the adult industry which has an annual turnover of $2.6 billion,” Carnell noted. “It’s hypocritical banks do not provide services to the adult industry when businesses are appropriately registered and regulated. Access to banking services is essential for a legitimate business to operate.”
For American readers in the adult industry, the American organization most analogous to the ASBFEO may be the National Federation of Independent Business (NFIB), or another, similar organization. While the influence or clout of such organizations in either country is debatable, the fact any outside group would weigh in on the side of adult business owners still strikes me as significant.
While there have been individual pundits and journalists who have spoken up on behalf of American adult businesses when it comes to banking discrimination (and other issues, like the capriciousness of obscenity prosecutions), I’m hard-pressed to recall a time when any outside organization like the NFIB along the lines of the has taken up the adult industry’s cause.
I have no idea whether the ASBFEO’s critique of Australia’s banks will have an impact, or if Carnell’s comments will be heeded at all. One of her observations, however, is something officials around the globe would be wise to consider, whether it’s in the context of adult entertainment, or any number of other “vices” which people tend to indulge in, with or without the approval and regulation of financial institutions and governments.
“If you can’t get a bank account, what it says to those small businesses in the sex industry is you’ll need to operate in the cash economy,” Carnell said, “and that’s the last thing we want people to do. We want people to be in the system [and} pay the amount of tax that they’re supposed to pay.”