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Education

Realities and fears Make Love Not Porn is the antithesis of porn. It is female-
centric and life affirming, and seeks to displace the role of
of reputational risk hardcore pornography as "sexual education by default" by
promoting examples of real intimacy. Yet reputational risk
has effectively barred Gallop from the payments system.
By Theodore F. Monroe Paypal and Stripe are not options, and it took her more
than four years just to find a bank that allowed her to open
Attorney at Law a business bank account.

ost banks know their business model Most such businesses, even those that are "socially positive"
depends on public trust. Thus, banks are find huge difficulty obtaining payment processing.
naturally averse to risks that can undermine Gallop noted, "Not only has MakeLoveNotPorn been
M the trust of their employees, clients, share- received positively around the world ever since launch
holders, regulators or the general public. in 2009, but because we are social sex and couples watch
our videos together, we have a virtually zero chargeback
Chief among such risks is reputational risk. Reputational record. We are a fully legal, ethical, transparent business,
risk broadly refers to the risk of possible damage to a and you will not find a more values-driven venture than
bank's brand and reputation, and the associated risk to MakeLoveNotPorn."
earnings, capital or liquidity arising from any association,
action or inaction that could be perceived by stakeholders Gallop coined the term SexTech to describe, "any form of
to be inappropriate, unethical or inconsistent with the technology or tech venture designed to innovate, disrupt
bank's values, beliefs, policies or standards. and enhance in any area of human sexuality and sexual
experience." There is a female-driven SexTech movement
However, banks can be subjective about what they perceive afoot. Yet they all confront this same issue.
as reputational risk and have an old fashioned view of
what they consider their stakeholders view inappropriate. Getting past the reputational risk barrier

To combat reputational risk, the Federal Deposit Insurance Enter intimate.io Ltd., which developed a tokenized
Corp. and Office of the Controller of the Currency alike blockchain solution for payments across the adult industry
counsel that an acquiring bank must: exercise extreme to make an end-run around acquiring banks and their
caution with regard to outsourcing any part of its reputational risk concerns. Crypto may ultimately prove
merchant processing business; closely monitor the quality, to be an effective solution for some merchants.
appropriateness, and marketing of its products and
services, including those provided through third-party But any merchant doing business in a controversial
service providers; and perform strong due diligence on vertical that wants to enter the traditional payments
prospective merchants and third-party organizations, as system will need to spend significant time finding a
well as ongoing evaluations of existing relationships. reputable agent to champion the merchant's cause, ensure
that the business presents no other risk concerns (such as
This means payment facilitators, payment processors, ISOs consumer protection or credit risk) on top of reputational
and other third-party service providers must be equally risk, and be prepared to pay premium rates.
concerned about reputational risk issues, particularly
regarding the types of merchants with whom they do Thus, even if you run a perfectly legal business that does
business, to safeguard their relationships with acquirers. not present any chargeback, credit or consumer protection
Chief among businesses shunned due to reputational risk risk issues, you may still find it nearly impossible to obtain
are those involving sex. credit card processing and other financial services if you
operate in certain verticals.
Reputational risk and SexTech
Cindy Gallop's experience is a poignant example. She said The information contained in this article is for educational purposes
she launched MakeLoveNotPorn.com at a TED conference only. Please consult an attorney before relying upon it for your spe-
in 2009 to "make it easier for the world to discuss sex openly cific legal needs. Theodore F. Monroe is an attorney whose practice
and honestly, both in the public domain and privately, focuses on the electronic payment and direct marketing industries. For
in our intimate relationships." In 2013, she expanded the more information about this article or any other matter, e-mail him
platform and launched MakeLoveNotPorn.tv, "an entirely at monroe@tfmlaw.com or call him at 213-233-2273.
user-generated, crowdsourced site where anyone from
anywhere in the world can share videos of themselves
having #realworldsex."

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