A Canadian company that helps people watch U.S. Netflix from Canada can no longer accept PayPal after the online payment processor cut off its service.
"On February 3rd, 2016, Paypal has severed payment processing agreement unilaterally and without prior warning," Toronto-based UnoTelly said on its blog Thursday.
"Paypal indicated that UnoTelly is not allowed to provide services that enable open and unrestricted internet access."
UnoTelly apologized for the inconvenience and said customers who pay using PayPal can choose to use a credit card instead.
PayPal's move comes after Netflix said it was implementing new measures to end the use of unblocking services like UnoTelly's.
Toronto-based UnoTelly is one of many companies that offer privacy technology that prevents online services such as Netflix, HBO Now, or Hulu from determining what country they're really visiting from.
By using such virtual private network (VPN) or DNS proxy services, Canadian Netflix customers can "border-hop" and watch shows such as Nurse Jackie or Hollywood movie blockbusters that are normally only available on Netflix in other countries, such as the U.S.
"Tired of being denied media content online because you are not in the U.K. or U.S.? … UnoTelly allows you access to over 300 geo-restricted channels regardless of where you live," says UnoTelly's customer help website.
Some shows and movies aren't available on Netflix in Canada because Netflix has not managed to negotiate a Canadian licensing agreement with the copyright holders. Copyright holders such as Bell Media have complained that users of such services are stealing from them.
UnoTelly's services are available to customers in many countries, including the U.S., the U.K., Australia, Brazil and India.
"PayPal has recently discontinued service to certain businesses that actively promote their services as a means to circumvent copyright restrictions and violate intellectual property laws," the company told CBC News in a statement. "We apologize for any disappointment this may cause our users." Netflix has not responded to questions from CBC News.
Alleged copyright infringement
TorrentFreak, an online publication dedicated to copyright, privacy and filesharing, posted online an email that it says was sent from PayPal to UnoTelly.
It says that PayPal has determined that UnoTelly is "in violation of PayPal's acceptable use policy." It cites a section of the policy that says PayPal "may not be used to send or receive payments for items that infringe or violate copyright."
CBC News has asked UnoTelly about the email, but as of 4 p.m., hadn't received a response.
PayPal has previously refused to do business with other companies suspected of helping users violate copyright, such as cloud-storage service Mega and VPN provider iPredator, earlier TorrentFreak reports say.
Meanwhile, Netflix has apparently started directly contacting users of VPN services, according to Melbourne, Australia-based unblocking service Uflix, which reports that since Jan. 22, users have been getting messages that say, "You seem to be using an unblocker or proxy. Please turn off any of these services and try again."
Some consumer advocates have criticized Netflix's crackdown. In a blog post this week, Meghan Sali, digital rights specialist for Vancouver-based OpenMedia, wrote that VPN is legal and "by far the most user-friendly way for internet users to encrypt their browsing traffic, and to ensure they have a private, secure connection... in today's era of mass surveillance and big data mining."
She added that it also allows users in some countries to protect themselves from internet providers that selectively throttle or slow down certain types of traffic. She added that while throttling is highly restricted in Canada, the rules are sometimes violated. OpenMedia advocates for an open internet.