February 17, 2016 12:24 pm
Updated: February 17, 2016 1:41 pm

PayPal cuts off service to ‘Unblock-Us’ amid Netflix crackdown on VPN providers

This March 10, 2015 photo shows signage outside PayPal headquarters in San Jose, Calif

AP Photo/Jeff Chiu

PayPal appears to be continuing its crackdown on companies that help Netflix viewers watch movies and TV shows in other countries.

The unblocking company Unblock-Us, based in Barbados, said via Twitter the company is not accepting payments from PayPal. Earlier in February, the online payment service provider cut off the Toronto-based company UnoTelly.

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Virtual private network (VPN) services allow users in Canada or other countries to stream Netflix content available in the United States, which has a larger selection of Hollywood blockbusters and recent seasons of popular network shows than the Canadian version.

READ MORE: Could Canadians who watch the U.S. version of Netflix face new rules?

VPNs allow users to change their virtual geographical location – so users based in Toronto can appear to be located in New York to access U.S. Netflix.

While not mentioning any company directly, PayPal said in a statement it “does not permit the use of its service for transactions that infringe copyrights or other proprietary rights.”

“This policy extends to services that unlawfully facilitate infringement by intentionally enabling access to copyrighted television shows or movies in places where distribution of the content is not authorized by the copyright owners,” a spokesperson for the company said.

“In line with this policy, PayPal has recently discontinued service to certain businesses that actively promote their services as a means to circumvent copyright restrictions and violate intellectual property laws. We apologize for any disappointment this may cause our users.”

The decision follows a January announcement from Netflix to crack down on subscribers who use VPNs and proxy services to view out-of-country content.

READ MORE: PayPal cuts off service to Canadian VPN provider

Ariel Thomas, a copyright lawyer with the firm Fasken Martineau, says the Canadian Copyright Act makes it illegal for a company to offer services primarily to circumvent technologies that control access to copyrighted works or “hopping the fence.”

“The law recognizes there are legitimate purposes behind [VPNs],” Thomas told Global News. “There is no blanket prohibition on providing VPN services or using them, but in copyright law there is a prohibition on what we call ‘circumventing technological protection measures’ or hopping the fence.”

“Individuals aren’t allowed to hop the fence, and also people aren’t allowed to provide services to others to enable them to hop the fence if those services are provided primarily for that purpose.”

However, Thomas says the law as it is written is very broad and hasn’t been tested in court.

“There hasn’t been any similar cases about this yet,” she said. “So we would have to see how narrowly a court would interpret these provisions.”

VPNs can also be used legally by individuals or companies for security or privacy measures, like encrypting  internet connections.

In a statement to Global News last week, UnoTelly CEO Nicholas Lin said PayPal’s decision has been disruptive to his company.

“The decision by PayPal has been extremely disruptive to us and our users as there was no prior warning,” Lin said in an email.

“Whether if it is fair or not, the consumer and public will be the best judge. The sentiment on social media and comment section of various media coverage is a good reflection on how the public feels about this issue.”

Global News attempted to reach Unblock-Us for comment but has not received a response.

*With files from Nicole Bogart

© 2016 Shaw Media

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