Censorship spreading to eBookstores?

I got an urgent email from BookStrand (an eBookstore) today saying, among other things:

Dear Publisher,

We were informed by PayPal, without notice, and by our credit card processing company, that we are required to remove all titles at BookStrand.com with content containing incest, pseudo incest, rape, and bestiality, effective immediately.

We request that you immediately log into your account and unpublish all titles that contain the restricted content. If you have uploaded titles containing restricted content and do not unpublish these titles as we are requesting, we will deactivate your entire publisher account, which will remove all your titles from sale.

Now, before you shout "Good for them!", take a look at the rules below and see how general they are. This is currently an issue with BookStrand, but given that they say the people making the rules are PayPal and a credit card provider, could this show up for Smashwords, All Romance eBooks, etc. in the near future?

The "forbidden content" rules include:

- Pedophilia in any size, shape, or form. Good rule

- Any form of sex with minors or any character under eighteen years old. Eliminates a lot of current YA fiction, but OK

- Sex with a young character still in high school or using variations of "teenager" or "barely turned" 18 or 19 for sexual titillation. Because Twilight must be porn, right? This is ridiculous. God forbid that erotica contain "sexual titillation" except among married couple. Adults are adults, and 18 and 19 year olds do actually engage in sex, often for the purpose of sexual titillation, their own and others.

- Hatred for characters based on race/ethnicity or religion. Because hundreds of books including ones assigned to high school students such as Catcher in the Rye must be porn.

- Hatred or bashing of gays/lesbians. I can see restricting books that celebrate such hatred, but ruling out the hatred of gays as a topic wipes out another huge segment of the YA market.

- Titles with covers that show male or female genitalia, butt cracks, or the female nipple. So anything posted for Thong Thursday, that your plumber will use to adorn your kitchen, or that you could wear to the beach anywhere in the U.S. is barred? Ban the nipples and genitalia, but are we children that we cannot see a butt?

- Any combination of incest or sexual acts involving an immediate family member. Good rule

- Pseudo incest or sexual acts with parents or siblings ("step" or "foster") for the purposes of titillation. That eliminated three of my books, but fair enough

- Rape for the purposes of titillation. Good rule

- Scenes of non-consensual bondage or non-consensual sado-masochistic practices. Fairly broad restriction, since a lot of BDSM play involves at least a hint of non-consent as part of the play, but fair rule.

- Bestiality with naturally occurring animals. Sex with werewolves, demons, dragons, etc. OK. Sex with sheep, not OK.

- Sex with non-animated corpses. Even if they're trying to eat your brains while you screw, that's OK.

- Snuff. Good rule

- Scat play (sexual acts involving urination and defecation). Whatever

- Harmful content such as instructions on how to make a bomb, etc. Fair rules, though a bit open-ended
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