FSC Petitions CFPB to Address Financial Discrimination

In the statement announcing the submission to the CFPB, FSC Executive Director Alison Boden said “abusive banking practices have had a devastating impact on the adult entertainment and sexual wellness industry, causing financial instability and limiting businesses growth.”

“It is crucial that the CFPB recognizes and addresses these issues to ensure a level playing field for all workers and businesses operating in our industry,” Boden added.

In the announcement, FSC said that by “helping regulators better understand the discrimination faced by the industry, FSC aims to protect the rights and interests of adult industry professionals and promote fair and equal access to financial services.”

“Abusive banking practices have plagued the adult industry for decades, but the shift to digital payments and the rise of the creator economy has exacerbated the problem,” FSC added. “The arbitrary closure of bank accounts, refusal to provide financial services such as loans and insurance, excessive scrutiny and sometimes extortionate fees deny adult businesses and workers the ability to operate in the same manner as other legal businesses.”

FSC said the 13-page statement, which was submitted in response to the CFPB’s request for comment on Abusive Acts or Practices, “provides a comprehensive overview of the specific challenges faced by the adult industry and offers recommendations to address these issues.”

“Drawing upon the organization’s extensive fact-finding work and outreach to affected workers and businesses, the comment highlights the importance of upholding free speech rights, combating discrimination, and promoting fair access to financial services,” FSC added.

In the letter, which is addressed to CFPB Director Rohit Chopra, Boden notes that “creating and distributing adult material, whether for commercial or personal purposes, is legal in every state in America.”

“Despite this core legal standing, industry workers – from producers and performers to technical and administrative staff, website designers and software engineers, even subcontractors and service providers – are singled-out by banks and financial services providers who deny them basic banking services like checking and savings accounts,” Boden adds. “The risk profiles of industry workers are no different (and often lower) than the general public, yet banks commonly reject their business.”

The letter provides a wealth of survey data and other information underlining the problems financial discrimination presents to the adult industry, including what the FSC terms the “cascading effects of banking discrimination.”

“In addition to the profound personal insult felt by FSC members, banking discrimination causes huge practical problems and often results in concrete personal injury,” the letter states. “Independent access to banking means independent control of your finances. Control of your own finances means stewardship of the major components of life: food, shelter, healthcare, transportation, etc. Consequently, the impacts of banking discrimination are profound and far reaching, and the most pernicious result of blacklisting is the requisite channeling of industry workers’ finances through third parties in order to meet these necessities.”

FSC also notes in the letter that handing control of one’s finances to someone else “creates prime conditions for exploitation.”

“Lawful income becomes the catalyst for coercion and servitude, as earnings can be stolen or withheld with little legal recourse,” Boden adds in the letter. “Unable to establish credit, industry workers can’t independently get a mortgage or rent an apartment, establish utilities, get a car loan, etc., forcing them to channel their income – the fruits of their labor – through the hands of a third party. Even where this third party is a spouse or relative, this form of dependence can be disastrous, as any dispute could result in being cut off from access to one’s earnings, put out on the street, or worse.”

Read the full text of the letter on the FSC website. For more information on the CFPB’s public comment period on Abusive Acts or Practices, click here.