Dating Site Operator's Suit Against PayPal Advances

SAN JOSE, Calif. — A suit targeting PayPal's acceptable-use policy has survived a round in court after a federal judge ruled that the alternative payment processor can't dismiss claims over its refusal to work with a pair of dating websites.

InfoStream, which operates SeekingArrangement.com and WhatsYourPrice.com, claimed in a suit filed at federal court in San Jose, Calif., that PayPal suspended their accounts for "sexual nature" but continued to service competing dating services AshleyMadison.com and ArrangementSeekers.com.

SeekingArrangement.com caters to  members seeking dates who refer to themselves as either "sugar daddy, sugary mommy or sugar baby users." WhatsYourPrice.com, meanwhile, is a "marketplace" site that "allows members to buy and sell the opportunity of going out on a first date."

The suit has roots back to 2007 when PayPal suspended the sites' accounts after it said that they incorporate options such as "Dating — Casual/Intimate Encounter" and "Married Dating/Discreet Affair (meeting for purposes of having sex)."

But last year InfoStream and its CEO, Lead Way, said they learned that not only has PayPal passively accepted a continued relationship with identical, competing websites such as Ashley Madison.com and ArrangementFinders.com, and that PayPal actively has for years “pre-approved” them, finding the sites to be in compliance with the AUP.

As a result, InfoStream sued PayPal — despite claims outside the statute of limitations — alleging breach of contract, bad faith and unfair business practices, as well as antitrust claims.

Infostream in the suit alleged that “PayPal manipulates the downstream markets for its own benefit” by “choosing market winners in downstream markets with the intent to benefit itself by increasing revenue and in maintenance of its market power in the confidential payment services market.”

U.S. District Judge Susan Illston last week agreed with Infostream, ruling that PayPal's can't dismiss claims of breach of contract, breach of the implied covenant of good faith and fair dealing and unfair competition law under California Business and Professions Code § 17200.

Illston said PayPal's argument to dismiss claims in the case "is further complicated by the fact that the AUP prohibits use of PayPal for 'activities that relate to sales of ... certain sexually oriented materials or services.' ”

"The AUP does not prohibit activities related to the sale of all sexually oriented services," she ruled. "If a contract is capable of more than one reasonable interpretation, it is ambiguous."

Illston also ruled that the state's statute of limitations is validated in the case because of the "inherently secretive nature of PayPal's conduct."

"[I]t is reasonable that plaintiffs could not have discovered PayPal's 'motivations' until plaintiffs were explicitly informed of PayPal's 'pre-approval' of identical competitor websites," Illston said.

The federal judge, however, dismissed Infostream's antitrust and fraud claims against PayPal.

Infostream claimed in antitrust allegations that the result of PayPal’s activities is that competitors in the downstream market have been driven out, leaving the specialty online dating services market with fewer choices, diminished pricing competition and inferior products.

Illston granted the plaintiffs leave to amend the Sherman Act and fraud claims, and ordered an amended complaint to be filed by today.
  

View order granting, denying motion to dismiss

Related:  

Copyright © 2025 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

Cherry Kiss, Derek Kage Cap AEBN's Top Stars for 4th Quarter of 2024

AEBN has revealed its most popular performers in gay and straight theaters for the fourth quarter of 2024.

A Golden Night in Hollywood: 2025 XMAs Shine on Adult Entertainment's Best

To paraphrase the unofficial U.S. Postal Service motto: Neither rain nor cold nor the chaos of natural disasters can stop members of the adult entertainment community from the completion of their appointed duty every January: to honor the artistic and commercial achievements of their peers.

What Changes in DC Could Mean for the Adult Industry

On November 5, 2024, American voters were called to the polls. The results of that election revealed an unquestionably uncomfortable truth for everyone, regardless of party or ideology: the “united” part of United States does not appear to be holding strong.

Byborg Acquires Gamma Entertainment

Luxembourg-based Byborg Enterprises SA has acquired 100% of Canadian adult conglomerate Gamma Entertainment.

Adult Creative Debuts 'Pornful' Website Management Platform

Web design and marketing firm Adult Creative has launched its new Pornful website management platform.

2025 XMA Winners Announced

Winners of the 2025 XMAs were revealed Sunday night during a ceremony hosted by Vanna Bardot and Ryan Reid at the world-famous Hollywood Palladium.

X3 Expo Day 2 Looks at the Industry's Past, and Ahead to Its Future

A gorgeous day in LA saw a massive procession making its way along Sunset Blvd., as hundreds of excited fans headed to the historic Hollywood Palladium for a rendezvous with the galaxy of A-list adult stars awaiting them on Day 2 of the 2025 X3 Expo.

X3 Expo Pops Off With All-Star Lineup

A wave of excited fans cascaded down Sunset Blvd., cresting and breaking with anticipation as they flowed into the historic Hollywood Palladium, where the A-list echelon of the adult world stood ready to greet them, pose with them, chat them up, and showcase the latest in spicy entertainment, as the 2025 X3 Expo popped off.

XBIZ Honors Uplifts Spirits Amid Challenging Times for LA and the Adult Industry

"A bunch of misfit toys." That’s how MojoHost founder Brad Mitchell described himself and his industry peers at the 2025 XBIZ Honors ceremony at Hollywood’s Kimpton Everly Hotel. Everyone cheered in agreement. Frankly, they wouldn’t have it any other way.

Kansas Sues Adult Website Operator Under AV Law

Kansas Attorney General Kris Kobach has filed suit against SARJ LLC, alleging that the company’s adult websites have failed to implement age verification as mandated by state law.

Show More