PayPal has instituted a new policy aimed at censoring what digital denizens can and can’t read, and they’re doing it in a way that leaves us with little recourse to challenge their policies in court. Indie publisher Smashwords has notified contributing authors, publishers, and literary agents that they would no longer be providing a platform for certain forms of sexually explicit fiction. This comes in response to an initiative by online payment processor PayPal to deny service to online merchants selling what they deem to be obscene written content. PayPal is demonstrating, again and to our great disappointment, the dire consequences to online speech when service providers start acting like content police.

Mark Coker, founder of Smashwords, described the new policy in a recent blog post. The policy would ban the selling of ebooks that contain “bestiality, rape-for-titillation, incest and underage erotica.” Trying to apply these definitions to all forms of literary expression raise questions that can only have subjective answers. Would Nabokov’s Lolita be removed from online stores, as it explores issues of pedophilia and consent in soaring, oft-romantic language? Will the Bible be banned for its description of incestuous relationships?

This isn’t the first time PayPal has tried its hand at censorship. In 2010, they cut off services to the whistleblower WikiLeaks, helping to create the financial blockade that has hamstrung the whistleblower organization. And as we explained when WikiLeaks was facing censorship from service providers: the First Amendment to the Constitution guarantees freedom of expression against government encroachment—but that doesn't help if the censorship doesn't come from the government. Free speech online is only as strong as private intermediaries are willing to let it be.

Frankly, we don’t think that PayPal should be using its influence to make moral judgments about what ebooks are appropriate for Smashwords readers. As Wendy Kaminer wrote in a forward to Nadine Strossen’s Defending Pornography: “Speech shouldn’t have to justify itself as nice, socially constructive, or inoffensive in order to be protected. Civil liberty is shaped, in part, by the belief that free expression has normative or inherent value, which means that you have a right to speak regardless of the merits of what you say.”

But having a right to speak is not the same as having a right to be serviced by a popular online payment provider. Just as a bookseller can choose to carry or not a carry particular books, PayPal can choose to cut off services to ebook publishers that don’t meet its “moral” (if arbitrary and misguided) standards.

Online payment providers like PayPal help many websites fund their very existence. As we explained in our interactive graphic Free Speech is Online as Strong as the Weakest Link , a payment provider can shut down controversial online speech by cutting off their means of financial support. And PayPal, the behemoth of online payment providers, has little incentive to compromise with small businesses that are punished through these arbitrary policies.

Unfortunately, Congress knows just how vulnerable online speech can be to the vagaries of payment providers. The Stop Online Piracy Act , defeated earlier this year after Internet-wide protests, contained language that would have allowed individuals and companies to cut off financial support for a website simply by sending an infringement notice to its payment providers or ad networks. No judge or jury would have been required.

The censorship of Smashwords is a blow to free speech and adds to the ever-growing list of examples of payment providers turned into content police.