PayPal Shuts Down Payments to Mega

Published: February 28, 2015 9:47 PM /


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The cloud storage and file hosting service, Mega, will no longer be able to process payments from its customers. After coming under intense pressure from credit card companies, PayPal has deleted Mega's PayPal account and discontinued processing payments for them.

Mega's trouble began in September of last year when a study by NetNames labeled Mega a haven of piracy, using a poorly researched study. In the study Mega is considered to be a site primarily dedicated to copyright infringement, because of an alleged 81% of its files are infringing. However this figure was obtained using a small sample size, and was not representative of the site as a whole.

Recently, Senator Patrick Leahy, a proponent of SOPA and PIPA, put pressure on credit card companies to stop handling payment transactions for the companies listed by NetNames. In response to this, Visa and MasterCard have been putting their own pressure on PayPal to stop conducting transactions for Mega.

This situation is baffling, considering that Mega has provided extensive documentation to prove it is acting lawfully. The site responds quickly to takedown notifications over copyright violations, acting in accordance with the DMCA. Mega seems to be targeted in this case because some people use it to store content they do not own the rights to, but the entire point of the safe harbor provisions of the DMCA is to shield service providers from liability for infringing content that they host as long as they respond to takedown requests. There seems to be no justifiable reason for going after Mega.

In a statement Mega received from PayPal, PayPal acknowledged that Mega is operating in accordance with the law, and even seemed to apologize for discontinuing to provide their service to Mega. According to Mega, their "unique encryption model" was the reason given by PayPal for its actions. However Mega has no intention of bowing to pressure and will continue to provide end-to-end encryption for its users.

Mega is currently unable to accept payments, and are looking for alternatives to PayPal. For now they have extended all accounts by two months, free of charge.

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| Senior Writer

I’m a technology reporter located near the Innovation District of Kitchener-Waterloo, Ontario.