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Are Payment Processing Companies’ Political Stands ‘State Action’?

April 20, 2021

By Michele M. Bowman, Esq.

Processing credit card payments may sound like a pretty boring chore to most small business owners. But if your type of business is on the blacklists of payment processing companies, boring is the last thing this issue might be. Payment processing companies are deep in the cancel culture game, and legitimate businesses that sell merchandise deemed objectionable could have their accounts cancelled with no notice and no recourse. 


Everyone hurriedly clicks “I agree” at the Terms of Service prompt when downloading a new app or updating software, or pretty much participating in life online. But seller beware when you do this as a merchant, especially if your wares happen to be on the growing and extensive blacklists of payment processing companies. If you transact on the blacklist, they can terminate your account with no notice, suddenly leaving you in the financial dark. 


Some of the blacklisted activities or industries are not surprising: You can’t use a payment processor to sell narcotics or participate in trademark or copyright infringement. You can’t purchase or sell stolen property, or support Ponzi schemes, or money launder. But some of the activities, like legally selling firearms with an FFA license or selling sexually oriented materials, are protected by the U.S. Constitution – if your payment processor were the government. However, the Constitution and its Amendments guarantee your rights against government action, not private companies. 


The big payment processing companies trade publicly and have shareholders – they aren’t the government. The Constitution doesn’t protect small businesses and their owners from private actors’ violations of your constitutional rights. Or does it? 


In two arenas – speech platforms and voter reform – technology companies including payment processors are acting more and more like governments, and the more they do, the more they engage in what courts call “state action,” which is necessary to prove a constitutional violation. “Conduct that is formally ‘private’ may become so entwined with governmental policies or so impregnated with a governmental character that it can be regarded as governmental action,” according to the U.S. Supreme Court


For example, when they boot various public figures and voices from their platforms, tech companies are deciding what and whose speech is acceptable on their platforms. And, as evidenced by their latest publicity move, Big Tech is taking a side on political issues like how votes are counted (in Georgia and elsewhere). In a reversal of years spent convincing courts that shareholders’ interests and profits are a corporation’s only priority, these companies now insist they have an obligation – which they seem to be reading as a right – to influence public and social policy. As one academic recently wrote in support of this corporate spiritual awakening, “Ensuring social cohesion in democracy is part of a CEO’s job of managing the strategic environment.” That sounds an awful lot like the role of a government. And the closer they get to acting like the government, the more “state action” they may be committing.


So when a payment processor terminates the account of an upstate gun store simply for selling guns, it may violate the Second Amendment. And when it does the same to a downstate bodega for selling a racy magazine, it may violate the First Amendment. The more these powerful companies take stands on political issues, exerting pressure on customers (and employees) to conform or be canceled, they increase their exposure to liability should one of those customers choose to challenge the termination of its account.

Historic Legislations for Dreamers and Farmworkers

March 22, 2021

By Ashana Nandram, Esq.

On March 18, 2021, the House of Representative approved two legislations, the Dream and Promise Act and the Farm Workforce Modernization Act, which both provide pathways to citizenship for Dreamers and farmworkers respectively. 


The term “Dreamers” refers to young undocumented people who were brought to the United States as children, and have lived most of their lives in the United States. If the Dream and Promise Act also passes in the United States Senate, then about four million Dreamers will be provided with a pathway to citizenship. Many young people who have been living and working in the United States legally under Deferred Action for Childhood Arrivals (DACA) will be eligible for citizenship should this bill become a law. DACA allows for only young undocumented people to work legally in the United States and provides protection from deportation. Immigrants with Temporary Protected Status (TPS) or Deferred Enforced Departure (DED) will also be allowed to apply for citizenship. 

Similarly, if the Farm Workforce Modernization Act becomes a law, more seasonal farmworkers will be able to come to the United States for work. These workers will be able to apply for lawful status and enjoy better working conditions. 


We will remain hopeful that these two bills can pass the United States Senate and become laws, since many undocumented immigrants will be provided with a pathway to lawful status.

The Yitzhak Law Group 

is excited to welcome to

our firm

Ashana Nandram, Esq.

to learn about Ashana, click here

© 2020 by The Yitzhak Law Group 

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