PayPal Restores Zivity’s Account After Saying It Was Obscene, But Now It’s Not

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PayPal restored sexy social network Zivity’s account tonight after a weeklong battle over whether the website violates its policy. Zivity bills itself as “Hotness. In Person” where “76,102 people just like you rub elbows with models, photographers, and video artists.” But early Thanksgiving morning, PayPal decided it didn’t want to rub elbows with Zivity anymore after four years of doing business together.

According to Zivity CEO and Editor-in-Chief Cyan Banister, Zivity asked PayPal if the content of the website would be an issue before they signed up with the payment processor. After a review by PayPal, Banister says she was told there were “no issues”. PayPal became the engine behind a majority of Zivity’s subscription payments.

Then over the holiday, Zivity got an email from PayPal saying “after a recent review of your account activity, it has been determined that you are in violation of PayPal’s Acceptable Use Policy” and the account has been “permanently limited.” That meant PayPal could hold the funds in the account up to 180 days. Zivity was ordered to remove all references to PayPal from their website.

According to PayPal’s Acceptable Use Policy cited in the email, PayPal may not be used to send or receive payments for certain sexually oriented materials or services or for items that could be considered obscene. So, what was acceptable for four years suddenly became a violation. What those “certain” materials are or what could be considered obscene is unclear.

Since Zivity’s photos are non-exclusive, some of the same images on Zivity appear on flickr and OneModelPlace, both of which use PayPal to process payments.

Banister says she called and emailed PayPal for a week to appeal the decision. She even had a potential inside connection. Zivity’s Co-founder and Chairman, and Cyan’s husband, is Scott Banister. He is named as a co-inventor on the original PayPal patent for its email payment system as well as being an early PayPal board member and investor. But Cyan and Scott’s connections had long left PayPal, and they got nowhere.

After getting the original email, she removed PayPal from her site.

Earlier today, a story about Zivity’s blocked account ran on the local NBC Bay Area TV station. PayPal told NBC:

“We cannot comment on specifics of Zivity.com’s account due to our privacy policy. However, we can confirm that PayPal does not allow our services to be used for the sale of adult-oriented digital materials. This is clearly stated in PayPal’s Acceptable Use Policy.”

Soon after the NBC segment appeared (coincidence or not?), Zivity got an email saying their account had been restored. PayPal did a further review and determined “the account is currently not in violation of our Acceptable Use Policy.” No explanation was given for what, if anything, had changed. PayPal apologized for any inconvenience and pointed to the same vague Acceptable Use Policy for any further questions.

So for now, Zivity can come back to PayPal. I asked Cyan if she was considering a switch to a new payment provider. She says she will look at alternatives, but “my members love, use, and want PayPal” and she doesn’t want to take the service away from them.

TechCrunch contacted PayPal for comment tonight, but has not received a reply.

Disclosure: Cyan Banister is a contributing writer to TechCrunch and hosts the show Speaking Of.. on TechCrunch TV.