September 2, 2014

Is the USDOJ Trying to Shut Down Businesses it Doesn’t Like?

department of justice

What if government officials suddenly decided they didn’t like your business? Then they went to your bank and warned them you were a bad risk and that the government had its eye on you?

Suppose the government brought so much pressure to bear that before long, your bank closed down your account or refused to open new ones in your name or the name of your business.

Apparently, this is exactly what is happening with the U.S. Department of Justice initiative called “Operation Choke Point.”

The program may have started as an attempt to “choke” off the finances of businesses that were “high risk” for participating in online fraud. But some worry it has become much more than that — a way for the government to attack businesses it really doesn’t like by browbeating banking institutions into cutting them off.

Among businesses being lumped into this high risk group are Payday loan providers and pyramid-type sales organizations. But they also include businesses broadly defined as “money transfer networks” and “credit repair services” too.

Certainly some of the businesses being targeted might be what other small business owners would consider…well, icky! For example, reports indicate that some in the adult film (porn) industry have been targeted.

But the point here is that some of these businesses are also legal and shouldn’t be targeted if they haven’t violated the law.

As author and technology consultant Timothy Geigner writes at TechDirt:

“This should be terrifying to business owners in every industry. Sure, this time they’re going after some companies that you may not like, be they porn, or Payday lenders, or people making racist materials, tobacco, or fireworks. But if those industries are operating within the law, they have the right to exist.”

Below is a full list of businesses the government considers high risk, according to columnist Tom Blumer of BizzyBlog. (Blumer obtained the list from an FDIC website):

  • Ammunition Sales
  • Cable Box De-scramblers
  • Coin Dealers
  • Credit Card Schemes
  • Credit Repair Services
  • Dating Services
  • Debt Consolidation Scams
  • Drug Paraphernalia
  • Escort Services
  • Firearms Sales
  • Fireworks Sales
  • Get Rich Products
  • Government Grants
  • Home-Based Charities
  • Life-Time Guarantees
  • Life-Time Memberships
  • Lottery Sales
  • Mailing Lists/Personal Info
  • Money Transfer Networks
  • On-line Gambling
  • Payday Loans
  • Pharmaceutical Sales
  • Ponzi Schemes
  • Pornography
  • Pyramid-Type Sales
  • Racist Materials
  • Surveillance Equipment
  • Telemarketing
  • Tobacco Sales
  • Travel Clubs

We’re certainly not here to defend the value of some of the businesses on the list. But, again, that’s beside the point.

It’s one thing if the DOJ wants to put a stop to online fraud. But the issue seems to have already turned political, reports the Wall Street Journal.

And if the DOJ is using “Operation Choke Point” as an excuse to attack businesses based on the department’s own subjective set of values, how long will it be before other private businesses are targeted too?

Image: Wikipedia

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Shawn Hessinger - Editor


Shawn Hessinger Shawn Hessinger is the Editor for Small Business Trends. He is a journalist and social media networker with more than a decade of experience in the traditional newspaper business before moving to the digital world. He was the former community manager of BizSugar and the former community editor at AllAnalytics, a site dedicated to professionals in the business intelligence and analytics community.

One Reaction

  1. This may not be good for businesses that operate purely online. In these instances, these companies may just be more contented if they just put their business in another country that does not have the strict rules.

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