On June 29, 2015, Tom Dart, the sheriff of Cook County, which contains the city of Chicago, sent an open letter to Visa, Mastercard, and other payment processors.
As the Sheriff of Cook County, a father and a caring citizen, I write to request that your institution immediately cease and desist from allowing your credit cards to be used to place ads on websites like Backpage.com.
Backpage is sometimes referred to as "America's largest escort website," especially since Craigslist (sort of) no longer hosts adult ads—which, by the way, is a direct consequence of Dart's (ultimately failed) 2009 lawsuit against Craigslist.
When the sheriff decided to go after Backpage, he didn't bother suing them—he instead sent this letter to their payment processors.
"Your [credit] cards have and will continue to be used to buy ads that sell children for sex on sites like Backpage.com," Dart wrote. He then cited the anti-money-laundering statute 18 USC 1956, claiming that "The use of credit cards in this violent industry implies an undeserved credibility and sense of normalcy to such illicit transactions and only serves to increase demand."
Mastercard dropped Backpage the very next day. Visa and others followed suit shortly after. Backpage sued Dart, claiming that the sheriff had violated the First Amendment.
On Monday, the Seventh Circuit Court of Appeals ruled unanimously that Dart's letter did violate the First Amendment and ordered an injunction against Dart and his office. They will be restrained from coercing or threatening "credit card companies, processors, financial institutions, or other third parties with sanctions intended to ban credit card or other financial services from being provided to Backpage.com."
This decision is a square victory for the site—though what that means can depend on who you ask. Anti-sex-trafficking organizations have accused Backpage of facilitating sex trafficking, but sex worker advocates say that if they can't post classified ads, they're put at greater risk.
On top of that, the Backpage decision claps back at an increasingly pervasive form of censorship—censorship via payment processor—of which WikiLeaks has also been a victim.
Why Backpage won
The Backpage opinion, written by Judge Posner, one of the most influential members of the federal judiciary, blasts Dart for using his office to "threaten legal sanctions against the credit-card companies for facilitating future speech."
Dart argued that he was merely "expressing his disgust."
Judge Posner responded, "That's not true, and while he has a First Amendment right to express his views about Backpage, a public official who tries to shut down an avenue of expression of ideas and opinions through 'actual or threatened imposition of government power or sanction' is violating the First Amendment."
He then cited a personal essay in XOJane by a dominatrix, as well as the Wikipedia page for "dominatrix"
Dart had sent the letter and then the payment processors had caved—that didn't look like a case of one man merely expressing his feelings. "The causality is obvious," Posner wrote.
On top of that, Dart had sent the letter on official stationery, signed it as "Thomas Dart, Cook County Sheriff," claimed that Backpage was facilitating sex trafficking, and intimated that "that two of the world's largest credit card companies may be criminal accomplices," the judge pointed out.
The day after the letter was sent, the sheriff's director of communications emailed Visa to let the company know that the sheriff was about to hold a press conference. "Obviously the tone of the press conference will change considerably if your executives see fit to sever ties with Backpage and its imitators," the email said.
In court, Visa claimed that "at no point did Visa perceive Sheriff Dart to be threatening Visa,"and that it had voluntarily agreed to stop serving Backpage. Posner dismissed that testimony, implying that coercion or perhaps some form of corporate false consciousness has resulted in the company's affidavit.
"But what would one expect an executive of Visa to say? 'I am afraid of the guy?'"
It didn't help that Visa's own employees had sent internal messages referring to Dart's director of communications' email as "blackmail."
Posner's opinion tackled other questions that weren't at issue, such as whether Dart would have succeeded in a direct lawsuit against Backpage. The judge was skeptical about the hypothetical lawsuit, implying that Dart had gone after the payment processors because he would have lost against Backpage in a court of law. Regardless of whether Backpage was actually involved in criminal activity, section 230 of the Communications Decency Act shielded both Backpage and the payment processors from liability under the state and local law that Dart has the power to enforce.
Dart "decided to proceed against Backpage not by litigation but instead by suffocation," Posner wrote.
The judge also said it was unclear whether Backpage was engaged in illegal activity at all. "Nor is Sheriff Dart on solid ground in suggesting that everything in the adult section of Backpage's website is criminal, violent, or exploitive. Fetishism? Phone sex? Performances by striptease artists? (Vulgar is not violent.) One ad in the category 'dom & fetish' is for the services of a 'professional dominatrix'—a woman who is paid to whip or otherwise humiliate a customer in order to arouse him sexually."
Posner also issued strong and potentially controversial statements about Backpage and sex trafficking. "[T]here are no reliable statistics on which Sheriff Dart could base a judgment that sex trafficking has been increasing in the United States," he said in his opinion.
These are shots fired from a formidable force inside the federal judiciary. Back in September, the Washington Supreme Court found Backpage liable for ads for underage prostitution, ruling that CDA 230 was not applicable. (The dissent argued that CDA 230 did apply).
While anti-sex trafficking organizations have painted Backpage as a haven of sexual exploitation, sex worker advocates have decried the war on Backpage, arguing that shutting down sites like Backpage or Redbook (shut down in 2014) only makes sex work more dangerous by forcing workers to make split-second decisions on the street about their clientele instead of being able to screen them over the internet.
The Bigger Picture: Censorship by Payment Processor
In the wake of the financial blockade on Backpage, some sex workers turned to Bitcoin, mirroring how WikiLeaks also turned to cryptocurrency after banks and payment processors began to blockade them in 2010.
In fact the ruling in Backpage.com v. Dart is an uncanny callback to the WikiLeaks financial blockade, where every major payment processor voluntarily ceased to process donations to the organization in response to pressure from Senator Joe Lieberman. If this concerted effort had been viewed as a state action, it would have no doubt been a violation of the First Amendment, as Dart's letter was ruled to be. The official story was that credit card companies had simply decided to do it all on their own. Today, the bulk of donations to WikiLeaks are made in cryptocurrency.
Financial blockades are possible because the world of payments is bottlenecked by a handful of payment processors
Financial blockades are possible because the world of payments is bottlenecked by a handful of payment processors. If those payment processors decide to stop serving someone, it becomes significantly difficult to, well, exist in a capitalist society. But because payment processors aren't the government, the First Amendment can't be used against them. Pressure on payment processors has become a favored weapon of law enforcement against those who might otherwise be protected by the First Amendment (or in the case of gun-sellers, the Second Amendment).
And so the Constitution can't protect you from getting blockaded—or so we thought, until now. The legal reasoning of Backpage v. Dart might rest on Tom Dart's clumsy, heavy-handed intimidation tactics, but it's still precedent for an increasingly important issue, written in no uncertain terms by a highly-respected jurist. This isn't the end of the war on Backpage—the company is still under fire in other jurisdictions—and it's probably not the last we'll hear from Tom Dart. But it might mark the beginning of a new trend in the law, and a change in whether the government can get away with using payment processors to do their dirty work.