PayPal shoots self in foot while 'white knighting' for Netflix

Turns out, there's more than one way to exchange goods for money on the Internet.

With the recent rollout of Netflix Everywhere, the company has been on a tear trying to track down and lock out users who rely on VPNs to bypass its regional restrictions and access the US programming list -- or any other country's local selection of shows. Doing so hasn't been as easy as Netflix initially anticipated so it called in PayPal for backup.

See, VPN servers allow users to spoof their geographical location so even if they live in, say Germany, the Netflix system will think they're in located somewhere here in the states. What's more, many VPN services specifically advertise that they can help you get around Netflix's geo-barriers, and it's precisely those services that PayPal is going after.

According to a report from TorrentFreak, PayPal recently sent Canadian VPN service UnoTelly notice that it would no longer offer them payment processing services on "copyright infringement" grounds.

Specifically, the PayPal notice read:

Under the PayPal Acceptable Use Policy, PayPal may not be used to send or receive payments for items that infringe or violate any copyright, trademark, right of publicity or privacy, or any other proprietary right under the laws of any jurisdiction. This includes transactions for any device or technological measure that descrambles a scrambled work, decrypts an encrypted work or otherwise avoids, bypasses, removes, deactivates or impairs a technological measure without the authority of the copyright owner.

UnoTelly, in response, simply told its customers to use credit cards instead. So really the only company economically hurt by PayPal's white knighting is PayPal itself. Good work there, guys.