PayPal freezes VPN provider's account, spooked by BitTorrent

By on June 25, 2012, 4:00 PM

TorGuard, a VPN service provider, was recently given the cold shoulder by PayPal for providing BitTorrent-related services. Upon discovery of TorGuard's relationship with BitTorrent, PayPal abruptly froze the company's account, preventing the virtual network provider from sending or receiving payments through PayPal's service.

TorGuard received this vaguely-written e-mail notifying the company that it had violated PayPal's terms of service agreement.

When we reviewed your account, we noticed that your activity violates some of the agreements you have with us. Because of this, we’ve limited your accounts and can no longer offer our services to you. You’ll still be able to log in to view your transaction history, but you won’t be able to send or receive money.

Source:, PayPal support

Concerned about the potential disruption and not knowing exactly what rules TorGuard was breaking, the company's owner called PayPal to resolve the issue. A PayPal business account representative informed him that PayPal does not allow the promotion of torrent trackers. The owner confronted the support representative and explained that TorGuard is a type of hosting service, not a tracker or a company that promotes trackers. The PayPal employee said the decision had already been made and there was nothing further which could be done.

PayPal's reluctance to work with TorGuard is likely due to the cloud of requests and lawsuits which surround BitTorrent-related services which leverage PayPal to monetize their operations. Copyright holders have worked with PayPal in the past in order to identify website operators who are suspected of violating intellectual property rights. Additionally, the company routinely shuts off funding to such operations entirely.

PayPal is well-known for suspending accounts which engage in questionable activity. However, sometimes, the online payment service drops accounts which aren't so questionable. Markus Persson, Minecraft's creator, knows this first hand as well as Regestry, a company who utilized PayPal to collect donations for purchasing children's toys to give away for charity. PayPal suspended Regestry's account because, effectively, charity is not a "worthy cause".

TorGuard's owner seems mostly undaunted by the setback, however. Although the exclusion of PayPal payments may not necessarily be a good thing, he said that the site still accepts credit cards, pre-paid cards, Google Checkout and various other services.

User Comments: 12

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Mantrhax Mantrhax said:

I smell paypal being sued soon !

mevans336 mevans336 said:

I smell paypal being sued soon !

Why? They are free to do business with whomever they want. Deciding not to do business with companies that associate themselves with Bittorrent is not illegal in the slightest.

Guest said:

they looking for confrontation with anonymous again.....

Burty117 Burty117, TechSpot Chancellor, said:

The thing is they've suspended accounts for other completely innocent companies before, even charity's, someone needs to take them to court simply because they deserve to be in some kind of hot water...

Guest said:

Another evil Corporation flexes it's muscle.

morip said:

lol, its like paypal want to be attacked by script kiddies/anonymous again...

and paypal freezes their vpn now because its summer and all the kids and most adults are off school/work..

haha, what the hell?.

so its quite sure that they are working with the feds or something and are ready...

or could it just be that this is to get attention from script kiddies/4chan to hide/make them forget something else that's coming up?..

they are ready to trace back to the kids..

Tygerstrike said:

Ok so what they have done is violate the ToU that paypal setup, and the other company agreed to follow. How does that make paypal an "evil corporation"? Its a contract difference thats all. Torguard broke the ToU that paypal asks everyone to sign. Paypal didnt break their end of the agreement. Torguard did thats all. Its not some massive scheme to get ANON to attack them. Its not some "Giant Evil Corporation" flexing their muscles. Take off the tin foil hats guys. Remember the simplest answer is more then likely the correct answer in this case.

Jesus!!!! Let them watch one episode of Xfiles and they think their the experts on conspiracy. Real conspiracy, you will never know its going on till its over.

Guest said:

Except in the article, it stated they didn't.

They "might" have link to torrent, but that isn't absolute, nor is there any evidence provided to say they do.

All Paypal did is suspend a user account, without any investigation, and no way for the user to appeal or review the "evidence" against them.

It is their service, but if the user didn't violate any "rule" or TOU" then anything goes at the company whim?

Sorry, but business doesn't work like that.

Rippleman Rippleman said:

It does, it can, it will, and it just did.

treetops treetops said:

I know its not illegal or anything but its lame when they put the lock down on legit companies. Like grim dawn a up and coming hack and slash.

TJGeezer said:

I smell paypal being sued soon !

Why? They are free to do business with whomever they want. Deciding not to do business with companies that associate themselves with Bittorrent is not illegal in the slightest.

Plus, freezing their assets with no notice and only a vague justification not borne out by later facts would NEVER cause unjustified, actionable harm to any business. Wait... that doesn't sound right...

Tygerstrike said:

If there is a contract despute, freezing the assets of the transaction in question is common practice. It goes into a type of limbo. Its held until a third party arbitrator who is non biased towards either of the companies makes a ruling based on the evidence provided by both parties.

@Guest who posted...

Have you been living under a rock? Businees does work that way. Ive been in retail for over 25yrs. Ive seen much worse.

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