VSP Team

Recently the Internet users have been shocked by the new PayPal crackdown on VPN providers. The international payment system started to cut off service to companies that provide VPN services to customers. UnoTelly, the Toronto-based company, has become the first victim of this new policy. In the beginning of February, PayPal suddenly stopped providing services to them with no comments.

The company CEO Nicholas Lin told that they received no prior warning and were utterly disturbed by this move, reports Global News. Another service which has become blocked by PayPal is Unblock-Us, a company based in Barbados. Are there any other cutoffs planned, and if yes, which companies will fall under PayPal penalties, remains unknown.

PayPal Stepped Into a Futile Battle

These actions were not initiated by PayPal without a reason. The penalties are the result of stepping in the Netflix conflict with users who use VPN to fake their location and get access to shows which are unavailable in their native countries. The crackdown on VPN services was announced in January: according to the blog post by Netflix vice-president of content delivery David Fullagar, the company is turning to the new strategy of approaching the ‘unblockers’ problem. In fact, Netflix has to impose these limits due to the content licensing agreements which are issued on the country-by-country basis.

In other words, the official reason of PayPal penalties are ‘[highlight]copyright infringement concerns[/highlight]’, while they assure that cutoffs will affect only those VPN companies that actively promote themselves as a method of bypassing geographical copyright restrictions.

Why did they start from Canada?

The answer is simple. According to a report by Media Technology Monitor published in April 2015, nearly 40% of English-speaking Canadians are subscribed to Netflix. The probability is high that most of them use VPN services to get access to USA-only shows. In addition, in Canada PayPal may fall back on the country’s legal system which states that it is illegal for a company to offer services which are primarily designed to bypass technologies controlling access to copyrighted works.

However, Ariel Thomas, a copyright lawyer from the international business law firm Fasken Martineau, states that this law has never been tested in court yet. At the same time, the copyright concerns are not clear, as unlike pirates who download video files illegally, Netflix users are paying subscription fee, irrespectively of their country of living and method of accessing the website. That’s why the final decision will depend on how narrowly the court will interpret the Canadian Copyright Act – in case Canadian VPN companies will sue PayPal.


While Netflix and Paypal are fighting with ‘unauthorized’ viewers side-by-side, numerous VPN users have been offended by such moves. There are lots of people who use VPN for privacy issues, without aim to ‘steal’ Netflix content. It seems that PayPal officials did not think that far.

After all, PayPal rigorous attempts to help Netflix appear to be not that effective. Right after being blocked by the famous payment system, Canadian company UnoTelly advised its customers to switch their payment method to credit card instead of PayPal, Fortune reports.

Eventually, PayPal seems to have two ways of developing the situation. On the one hand, they may cut off service to all major VPN providers. Still, users will be able to pay for their services by credit cards. Ridiculously, according to established Internet tendencies, lots of smaller and less known VPN companies will come to light and offer their services, so that PayPal may have lots of work ahead. Anyway, all its actions and the fuss about them will have almost no effect.

On the other hand, PayPal may stop blocking VPN services due to the public dissatisfaction and protests, which will also result in not reaching its primary goal – helping Netflix. Finally, as it becomes more obvious that PayPal’s actions will have no effect, what was the point of starting this futile battle?

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