Dollar Scholar Asks: Can Credit Cards Ban Certain Purchases?

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A few weeks ago, the NSFW subscription service OnlyFans made the shocking decision to ban sexually explicit content. For a platform pretty much designed to share porn — and allow creators to make money off it — the change was a big deal.

And it was an even bigger deal when the company reversed it.

The issue at heart, at least according to CEO Tim Stokely, had to do with banks. Stokely told the Financial Times that firms like Bank of New York Mellon, Metro Bank and JPMorgan Chase were rejecting OnlyFans’ attempts to pay over 1 million people a month due to “reputational risk.” The ban was a way to “safeguard their funds and subscriptions from increasingly unfair actions by banks and media companies.”

When OnlyFans backed down a few days later, it only said it had “secured assurances necessary” to avert the ban. The whole thing exposed the sorts of hoops sex workers have to jump through to make a living, but it also got me thinking: If a company as big as OnlyFans can run up against bank restrictions, even temporarily, could I?

What can’t I use my credit card to buy? What shouldn’t I use it for?

I called Money’s de facto credit card expert, Jason Steele, to get some guidance. He told me that although the specifics of what went down with OnlyFans are unclear, it probably partially involved chargebacks.

Chargebacks happen when customers dispute a transaction and get paid back for it. In this case, it’s easy to imagine someone signing up to see gated OnlyFans content and then feeling some major regret when they get their monthly statement/get discovered by their significant other. To avoid copping to the porn purchase, they report it as fraud.

Because processors impose such high fees on chargebacks and fines on subsequent transactions, merchants really try to avoid situations where they might happen.

(Steele says that’s why, if I’m ever in a sticky situation with a business not providing goods or services as agreed upon, “just mentioning the word chargeback is often enough” to get a refund. The merchant would much rather deal with me and lose money on my sale than deal with getting dinged for my chargeback. But anyway.)

Chargebacks look bad for the credit card issuer, too, so even they try to prevent them by cracking down on risky purchases.

American Express, for example, hasn’t allowed customers to use its cards to pay for adult entertainment since 2000. At the time, an AmEx spokeswoman told ZDNet “there was an unacceptably high level of customer disputes” that led to it deciding “it was no longer profitable or practical to work with this industry.”

Banks and card issuers also prefer to avoid anything illegal, according to David B. Shipper, senior research analyst with Aite-Novarica’s Retail Banking & Payments practice. Child abuse allegations caused Mastercard and Visa to stop letting customers use cards on Pornhub last year. And even though marijuana is now legal in some states, it’s still outlawed at the federal level.

“The risk they see is facilitating an illegal transaction,” Shipper says. “I’m not sure if any [dispensary] locations can really accept credit cards or anything today. They handle a lot of cash because networks are wary of those businesses.”

Gambling purchases and transactions in sanctioned nations like Iran and Syria are generally forbidden, too. Outside of legal requirements, some financial institutions also block purchases of cryptocurrency, due largely to "concerns about customers understanding what they're getting themselves into — a more protective approach," says Tony DeSanctis, senior director of payments at Cornerstone Advisors.

There's also reputational risk to consider with items like firearms.

There’s a difference, though, between what I can’t and what I shouldn’t put on a card. Steele had an immediate answer to my second question: “The one thing you should never purchase on a credit card? Never, ever make a cash advance,” he says.

It has nothing to do with the law — it’s just not a good financial practice. Not only do cash advances typically have fees of 3% to 5% when I withdraw, but they also usually have sky-high interest rates. Because they amount to short-term loans, we’re talking APRs of, like, 30%.

Oh, and there’s no grace period like with normal purchases.

“The clock is running from the moment you make the transaction,” Steele says.

The bottom line

I also probably want to shy away from putting my card down anywhere there’s a merchant fee that outweighs the value of the rewards I would get from the purchase.

I typically can’t use my card for adult entertainment, drugs, crypto, gambling or purchases in sanctioned countries. I should avoid using it for cash advances and other items where I incur a loss.

All of these details are in the terms of my card agreement. But if I don’t want to read through those 20-30 pages of tiny font, there is another method that’ll tell me whether my card is accepted somewhere.

“The easiest way is to swipe it and see if it works,” Shipper says.

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