Banks Leery About Porn Pro's Personal Accounts, CNBC Reports
LOS ANGELES — Although the love/hate relationship between banks and the porn industry may be nothing new (ask any adult Internet business seeking a merchant account), now it seems that financial institutions are discriminating against adult professionals’ personal accounts if they’re not careful.
CNBC reported that City National Bank shut down adult star Chanel Preston’s recently opened business account due to "compliance issues” that she later found out from a bank manger was due to her webcam shows. City National declined to comment on the situation.
Preston also said she was denied a loan at a different bank. The loan officer asked if she was “affiliated with the adult entertainment industry?'” “When I said yes, she said, 'We will not give you a loan.’”
And Marc Greenberg, founder of the cable TV soft porn studio MRG Entertainment, filed suit against JPMorgan Chase in Los Angeles Superior Court, alleging the bank violated fair lending laws and its own policy for refusing to underwrite a loan for "moral reasons.”
The denial evidently was triggered by his adult work even though Greenberg produced movies that contained nudity and sex more than six years ago.
Greenberg's attorneys claim the bank denied his loan application because of the potential "reputational risk" to the firm. Although he started a refinancing process at the request of the bank he became suspicious after months of delays. He then contacted a bank vice president who, according to the complaint, "was evasive in his response to plaintiff's application status requests and finally informed plaintiff during a telephone conversation that plaintiff's loan application was refused due to 'moral reasons,' because of JPMorgan's disapproval of plaintiff's former source of income and occupation as an owner of a television production company that produced television programs that dealt with the subject of human sexuality.”
According to an FDIC spokesperson, banks have the right to make decisions as to the individuals and companies they’ll do business with, largely dependent on what they feel are the risk factors. Those considerations could include moral issues, as is the case with tobacco and gun companies.
Savvy porn pros have always known not to flaunt their businesses to their bankers, especially to corporate executives as one industry veteran attested in the CNBC article.
Although it's obviously hypocritical — banks will gladly work with one’s money but not if it’s connected to porn — the general advice, albeit ludicrous, is for adult businesses to keep personal names and vocations separate from their accounts.
As Preston noted, "It's kind of obvious about what I do when a young girl goes into a Valley bank with a different female name than the one on [their] driver's license."
When asked what people can do when confronted with these scenarios, industry attorney Allan B. Gelbard told XBIZ, “The problem here is that constitutional claims (such as discrimination based on first amendment activities) is generally only applicable to government actors. So when private entities do these types of things, there is generally no recourse. There should be, but there isn't. California has some more protective anti-discrimination laws, but they probably wouldn't cover this either. The only thing I can advise is to try to make sure to document everything the institution tells you when denying a benefit so, if they do something illegal, there is some documented proof.”