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PayPal recently introduced a new set of requirements for file-sharing and newsgroup websites using the payment provider's services, requirements that are so extreme that major file hosting websites like MediaFire, Putlocker and DepositFiles have had no choice but to drop support for the popular service.

Among the list of, what file hosting companies call "outrageous", demands is that file hosts must remove files at PayPal's request, with the payment provider not required to provide any valid reason whatsoever for making such requests. File hosting providers are also asked to provide intimate details in regards to infringement policies, and controversially, details regarding the provider's backend capabilities, some of which could constitute trade secrets.

Failure to abide by the 10 rules listed could see accounts and funds frozen and suspended indefinitely.

Detailed discussions between PayPal and file hosting companies such as Putlocker have yielded zero progress, with PayPal seemingly demanding even more beyond the listed 10 requirements. 

"They basically wanted access to the backend to monitor all the files being uploaded, and listing all files of users if they wanted, regardless of the privacy setting that the user might have selected," Putlocker told TorrentFreak.

With the file hosting industry shaken to its core after Megaupload was shuttered by US prosecutors in January, those that provide services to the industry, such as payment providers, are also scrambling to deal with the chilling effect from the takedown. The question now is whether other payment providers, such as Visa and Mastercard, will follow suit in drafting new draconian rules to protect their own self interests.

PayPal, Mastercard and Visa all controversially gave in high level pressure to cut off financial support for Wikileaks during the height of the controversy back in 2010, a decision that has since received widespread condemnation due to the fact that both Mastercard and Visa continued to support payments received for groups affiliated with the Ku Klux Klan. PayPal was also embroiled in a controversy last September when it refused to cut off funding to faith groups that gay groups accuse of promoting hate speech.