On the eve of its first match in this year’s Worst Company In America tournament, PayPal has changed its relatively new policy that would have forbidden the service’s use in the purchasing of e-books detailing certain sexual acts and behaviors.

As we first reported in February, e-book distributor Smashwords.com claimed it had been told to remove all titles containing descriptions of bestiality, rape and incest, or PayPal would no longer be available as a payment option to Smashwords customers.

But now the company has said it doesn’t want to stop the sale of books that merely describe such acts. Rather it’s e-books with visual depictions that could potentially be illegal.

As part of the policy change, PayPal says it won’t be issuing blanket decisions about any genres or types of e-book — the one exception being e-books with either descriptions or images of child pornography — but will instead consider titles on an individual basis.

“This is going to be a major victory for writers, readers and free speech,” said Mark Coker, founder Smashwords. “They are going to build a protective moat around legal fiction.”

It is also working on a system for authors to appeal the company’s decisions. Let’s just hope it works better than the system PayPal has for its customers.

PayPal backtracks on e-book policy [Chicago Tribune]

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