MONTREAL — U.S. District Court Judge Cormac Carney’s recent decision regarding MindGeek is so pretension-busting in its severity that it forces us to consider what the Montreal-founded, Luxembourg-based company really is, as opposed to what it purports to be. It isn’t just a successful IT company, as MindGeek itself has long professed. It’s not just the owner of some of the world’s most recognizable pornography sites.

To Carney, an almost 20-year veteran of the U.S. federal court system, MindGeek is nothing short of a “known alleged criminal entity” that participated in a “sex trafficking venture,” distributing, promoting and monetizing child pornography on its various sites, Pornhub very much included. And credit-card giant Visa, Carney writes, has played a crucial role in MindGeek’s ability to do so. “Visa,” Carney wrote in a typically scathing passage, “lent to MindGeek a much-needed tool—its payment network—with the alleged knowledge that there was a wealth of monetized child porn on MindGeek’s websites.”

Understanding how one of the world’s most recognizable brands wound up in court alongside one of the more infamous pornography providers requires a bit of context. In December 2020, Serena Fleites was the subject of “The Children of Pornhub,” a 4,000-word New York Times column detailing the dark side of a site that had long sold itself as a sex-positive, zeitgeist-riding online haven with mainstream pretensions, attracting advertising dollars from the likes of Kraft Heinz and Unilever.

Fleites had a sexually-explicit video of her 14-year-old self posted to the site by her then-boyfriend. It took weeks for site administrators to take the video down, by which time it had been viewed hundreds of thousands of times and reuploaded by other users, sending Fleites into a spiral of drugs and homelessness. She attempted to kill herself. Then another batch of videos of her, taken by a man who introduced her to heroin, made their way to MindGeek properties. 

In July 2021, Fleites and 33 Jane Doe plaintiffs sued MindGeek and Visa—the former because it posted the videos; the latter because it provided payment services for advertisements appearing alongside these videos. Visa sought to be dismissed from the case the following October. Carney’s decision was a denial of parts of Visa’s motion, effectively keeping it in the case.

Perhaps the more pertinent question, though, is why? Why would Visa, with its US$446.9-billion market cap and blue-chip reputation aged over nearly 65 years, continue to do business with MindGeek, despite obvious potential pitfalls and myriad warning flags? 

The answer, not surprisingly, is money. That MindGeek makes a lot of it—US$187.5 million EBITDA in 2020, according to a pitch deck I saw last year—was surely a draw to partners willing to overlook the hazards of the business. MindGeek-owned advertising portal TrafficJunky boasts 150 million daily visitors and 4.6 billion daily impressions on MindGeek sites. That is a lot of monetizable eyeballs. 

But another factor makes those eyeballs even more valuable to credit card companies. MindGeek trades in pornography, one of a number of so-called “high-risk industries,” for which credit card companies can charge significantly higher merchant rates, ostensibly to offset the increased risk of fraud and chargebacks. Like their counterparts in the e-cigarette, debt-collection and gambling trades, it costs pornographers more money to take money from their customers.  

“We’re talking about orders of magnitude,” Ian Dawkins, a principal at Althing Consulting, a B.C.-based cannabis industry consultancy firm, told me. “As soon as you become a ‘high-risk transaction,’ a credit card company can justify all kinds of stuff, like a flat transaction fee, a higher percentage, a 60-day payment window instead of 30 days. Whatever I want to do as a financial company, I can justify it, because I’m calling it high risk.”

The cannabis industry is instructive in this regard. At the outset of legalization in 2018, marijuana merchants found themselves paying outsized credit card rates, in large part because of the supposed risk of peddling the stuff, recalls Retail Cannabis Council of British Columbia executive director Jaclynn Pehota, who is also an Althing consultant. Those rates have since come down as the weight of government regulation helped “de-risk” the industry. The same can’t be said for MindGeek’s stock in trade. “Porn is far less regulated than cannabis,” Pehota told me.

Suffice to say, Visa and Mastercard did not wholly cut themselves off from the MindGeek revenue stream in the wake of the New York Times piece. Yes, both ceased providing payment services to Pornhub. But both continued to service TrafficJunky—even though, as I found out last February, the portal allowed for ad campaigns targeting search words like “13yearoldteen,” “not18,” “momdaughter” and various translations of the word “rape.”

I asked the two big credit card companies about it at the time. Elizabeth Scofield, Visa’s then-global brand-protection director, didn’t respond to my email. Mastercard senior vice-president Seth Eisen told me the company would look into it. In both cases, the status quo remained—at least until now. 

This week, as Carney’s judgment ricocheted around the web, I reached out to both companies again, this time asking how much they charged MindGeek for payment services. Visa once again did not respond, while Eisen sought to distance Mastercard from MindGeek and its ad platform. “We do not and did not have a contractual relationship with TrafficJunky. Any fees charged to TrafficJunky would have been by the acquirer,” he said in an email, referring to the bank that connects MindGeek to the Mastercard network.

It has taken the power of the courts to really change things, Fleites’s lawyer, Michael Bowe, told me. “Our goal in the MindGeek-Visa case was to get vindication for our clients, but also to transform the industry. There are going to be standards that are going to be required to ensure that content is consensual,” he said. 

Indeed, Judge Carney notes how Visa was potentially underwriting ad campaigns centred around rape and the sexual exploitation of minors. Six days after Carney’s decision, Visa announced it was no longer supporting TrafficJunky. Mastercard followed suit the same day. 

Six days later, I created an ad campaign using the same noxious keywords on Traffic Factory, the ad portal of Prague-based WGCZ, a MindGeek rival and the company behind the porn sites XVideos and XNXX. Traffic Factory, which boasts access to 200 million daily visitors, still accepts Visa and Mastercard.

Martin Patriquin is The Logic’s Quebec correspondent. He joined in 2019 after 10 years as Quebec bureau chief for Maclean’s. A National Magazine Award and SABEW winner, he has written for The New York Times, The Guardian, The Walrus, Vice, BuzzFeed and The Globe and Mail, among others. He is also a panelist on CBC’s “Power & Politics.” @MartinPatriquin