Credit cards companies are helping to fuel online piracy, according to a new study.
A report from the Digital Citizens Alliance concludes that Visa and MasterCard are widely used by customers of leading "cyberlocker" websites, which are lucrative hubs for illegal copies of movies, TV shows, video games and other copyrighted content.
The report, entitled "Behind the Cyberlocker Door," surveyed 30 of the most popular cyberlocker sites -- those that store files for users to download or stream to their computers -- and found that they are highly profitable.
The sites, which include FeakShare, Uptobox, Mega and Putlocker, are primarily used for content theft and generate $100 million in annual revenues. Some make as much as $15 million a year in profit due to low operating costs and the fact that they pay nothing for the product they distribute, according to the study.
These online portals generate revenue from advertising and by selling subscriptions, typically about $10 a month, to buyers who use credit card companies such as Visa and MasterCard to process their payments. Some sites produced as much as 70% of their revenue from subscription services enabled by payment processors such as Visa and MasterCard, the report said.
"Both Visa and MasterCard made statements saying 'we're not going to do business with these types of piracy sites,'" said David Price, head of piracy analysis at NetNames, the British firm that conducted the study for Digital Citizens Alliance, a nonprofit group that advocates for Internet safety and is supported by the creative industries.
"From our inspection, they have not put much effort into that area to really clamp down on the ability of people to pay for these services," said Price, whose company protects brands from online fraud.
PayPal was offered as a payment option on only one site (Mega) among those offering paid premium accounts. That's a big change from just two years ago when PayPal was the preferred method of payment, Price said.
"PayPal decided, we don't want to do business with these sites," he said.