Some "marketing agencies" are actually operating the adult business. How payment and risk teams can distinguish legitimate agency services from disguised platform operations before onboarding.
The Challenge
When a merchant approaches you claiming to provide "marketing services" or "content management" to adult creators, the complexity isn't in evaluating their marketing expertise - it's in determining whether they're actually operating an adult entertainment platform. Unlike traditional service providers, these businesses require functional analysis: mapping who controls content, who receives payments, and who owns customer relationships.
This guide walks through the complete assessment framework we use at Ballerine to evaluate agency merchants and distinguish legitimate service providers from disguised adult platform operators.
Understanding the Business Model Distinction
The adult content industry includes various business arrangements, but only some qualify as legitimate agency relationships:
Pure service providers: Agencies that provide marketing strategy, social media management, technical support, or administrative services to creators who maintain full control (low to medium risk, depending on controls)
Platform operators labeled as "agencies": Businesses that control content, pricing, payments, and customer relationships while claiming to be service providers (high risk - misclassified adult operators)
Following regulatory evolution in payment processing compliance, adult industry operators face heightened due diligence, more stringent compliance requirements, and different risk profiles than marketing agencies. Misclassifying them creates exposure for payment processors, banking partners, and compliance teams.
The Complete Assessment Framework
1. Content Control and Decision Rights
Why it matters: Who decides what content gets created, when it's published, and how it's presented reveals whether the relationship is advisory or operational.
A marketing consultant might recommend strategies, but the creator implements them. When the agency dictates content, that's operational control.
High-Risk Control Patterns
Content approval and veto rights:
- Agency reviews and approves/rejects all content before posting
- Agency dictates content schedules and posting frequency
- Agency requires specific types of content to be produced
- Agency controls which platforms content appears on
Why this is high risk: Approval authority over content indicates the agency is operating the business, not advising it.
Publishing access and control:
- Agency holds the login credentials to creator's platform accounts
- Agency uploads and manages all content on behalf of creator
- Creator cannot post independently without agency involvement
- Agency controls content removal and editing
Why this is high risk: Technical control over publishing means the agency is functionally operating the creator's presence.
Brand and persona ownership:
- Agency owns rights to creator's stage name or persona
- Agency controls creator's brand identity and visual presentation
- Creator cannot use their own brand independently
- Agency registers social media handles and domains in agency's name
Why this is critical risk: When the agency owns the creator's identity, the creator is functionally an employee or contractor of the agency's platform operation.
Acceptable Control Patterns
Advisory relationship:
- Agency provides content strategy recommendations
- Creator makes final decisions on all content
- Creator maintains publishing access and credentials
- Agency might assist with technical execution but doesn't control decisions
Limited technical support:
- Agency helps with video editing, thumbnail design, or scheduling tools
- Creator approves all content before publishing
- Creator can publish independently at any time
- No approval or veto rights for agency
What to Request from Merchant
| Contracts with creators |
- Content control provisions
- Approval rights and decision ownership
- Rules governing independent publishing
- Intellectual property ownership clauses
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| Platform access |
- Accounts accessible by the agency
- Defined agency permissions
- Creator access to their own accounts
- Password control and management procedures
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| Content guidelines |
- Content requirements imposed by the agency
- Approval workflows
- Examples of rejected or revised content
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| Brand ownership |
- Ownership of stage names or personas
- Registration ownership of social media accounts
- Ownership of domain names
|
Testing Protocol
- Creator interview: If possible, speak directly with creators to verify:
- Do they make their own content decisions?
- Can they post content without agency approval?
- Do they have independent access to their accounts?
- Contract review: Examine actual content control provisions, not just stated descriptions
- Technical verification: Request screenshots showing platform access permissions
Merchant Assessment Checklist
- ✅ Creator maintains final approval over all content decisions
- ✅ Creator has independent access to all platform accounts
- ✅ Creator owns their brand, persona, and IP
- ✅ Agency provides recommendations but doesn't control publishing
- ✅ Creator can terminate relationship and continue operating independently
- ✅ No approval or veto rights for agency over content
Red flag threshold:
- Agency controls publishing credentials = HIGH RISK
- Agency owns creator's brand/persona = CRITICAL RISK (auto-decline)
- Agency has content approval/veto rights = HIGH RISK
2. Pricing Authority and Revenue Control
Why it matters: Who sets the prices for subscriptions, tips, custom content, or pay-per-view material determines who's operating the business model.
A consultant might recommend pricing strategies, but implementation belongs to the business owner.
High-Risk Pricing Patterns
Unilateral pricing control:
- Agency sets all subscription prices without creator input
- Agency changes prices without creator approval
- Agency controls promotional discounts and pricing experiments
- Creators are not consulted on pricing strategy
Why this is high risk: Pricing authority is a core business function. Agencies that control pricing are operating the business, not advising it.
Revenue share resembling platform fees:
- Agency takes 40-70% of gross revenue (platform-like splits)
- Agency's share doesn't correlate to services provided
- Split applies to all revenue regardless of agency's involvement
- No transparent breakdown of why the split is justified
Why this is high risk: Revenue splits resembling platform commission rates suggest the agency is operating a platform, not providing discrete services.
Opaque revenue reporting:
- Creators cannot see real-time earnings
- Revenue reports are delayed or incomplete
- No transparent accounting of deductions
- Creators don't have independent access to transaction data
Why this is critical risk: Lack of transparency over revenue suggests the agency controls the financial operations, not the creator.
Acceptable Pricing Patterns
Creator pricing authority:
- Creator sets all pricing independently
- Agency might provide competitive analysis or recommendations
- Creator approves any pricing changes
- Creator has real-time visibility into earnings
Transparent service fees:
- Fixed monthly or annual fee for services (e.g., $500/month for social media management)
- Percentage-based fee clearly tied to services provided (e.g., 15% for payment processing and administrative support)
- Fee structure documented and justified
- Creators retain majority of revenue (70%+)
What to Request from Merchant
| Pricing documentation |
- Party responsible for setting subscription prices
- Approval process for price changes
- Decision process for promotional discounts
- Responsibility for communicating pricing to customers
|
| Revenue agreements |
- Revenue split breakdown
- Justification for the revenue split including services covered
- Historical revenue data for sample creators
- Average revenue retention percentage by creators
|
| Financial transparency |
- Creator access to revenue dashboards
- Availability of real time revenue visibility
- Transaction level detail available to creators
- Independent audit rights
|
| Fee structure |
- Breakdown of fixed versus variable fees
- Services covered by each fee
- Negotiability of fees by creators
- Comparison of fees to industry standard service fees
|
Merchant Assessment Checklist
- ✅ Creator sets their own pricing or has final approval
- ✅ Revenue split is transparent and justified by services
- ✅ Creator retains majority of revenue (ideally 70%+)
- ✅ Creator has real-time visibility into earnings
- ✅ Fee structure is clearly documented and reasonable
- ✅ Creator has independent access to financial data
Red flag threshold:
- Agency sets pricing unilaterally = HIGH RISK
- Revenue split >50% to agency = HIGH RISK
- No real-time revenue visibility for creators = HIGH RISK
- Revenue split structure resembles platform commission = CRITICAL RISK
3. Payment Flows and Fund Control
Why it matters: Following the money reveals who owns the business operations.
In legitimate agency arrangements, payments typically flow directly to the creator, who then pays the agency their service fee. When payments flow to the agency first, that resembles a platform model.
High-Risk Payment Patterns
Agency as payment recipient:
- All subscriber payments go to agency's merchant account
- Agency receives funds first, then distributes to creators
- Creators have no direct payment processing relationship
- Agency controls payout schedules and minimum thresholds
Why this is critical risk: Payment flow structure is the clearest indicator of operational control. The entity receiving payments is operating the business.
Delayed or conditional payouts:
- Creators are paid on monthly schedules (not real-time or daily)
- Minimum payout thresholds ($100, $500, etc.)
- Agency holds funds for "processing period" or "reserve"
- Creators cannot access their earnings on demand
Why this is high risk: Holding creator funds and controlling payout schedules indicates the agency owns the customer relationship and cash flow.
Opaque transaction details:
- Creators cannot see individual transaction data
- No visibility into chargebacks, refunds, or disputes
- Agency handles all billing issues without creator involvement
- No independent access to payment processor dashboard
Why this is high risk: Lack of payment transparency means creators don't have visibility into their own business operations.
Acceptable Payment Patterns
Creator as payment recipient:
- Payments flow directly to creator's merchant account
- Creator has direct relationship with payment processor
- Agency invoices creator for services rendered
- Creator controls their own funds
Transparent payment flows:
- Creator has full visibility into all transactions
- Real-time access to earnings data
- Creator handles refunds and chargebacks (or delegates with clear authorization)
- Agency provides administrative support but doesn't control funds
Service fee collection:
- Agency bills creator separately for services (monthly invoice, percentage deduction after creator receives payment)
- Clear documentation of when and how agency collects fees
- Creator can verify fees against services provided
What to Request from Merchant
| Payment flow mapping |
- Diagram showing where subscriber payment is received first
- Identification of the merchant account holder
- Payment processor relationship clarified for agency or creator
- Step by step fund flow from customer to creator
|
| Payout terms |
- Payout schedule to creators
- Minimum payout thresholds
- Hold periods or reserve requirements
- Process for creators to access their funds
|
| Transaction visibility |
- Creator access to payment dashboards
- Visibility into individual transactions
- Responsibility for managing refunds and chargebacks
- Communication process for disputes to creators
|
| Service fee collection |
- Method used by the agency to collect service fees
- Timing of fee collection before or after creator payout
- Fee deduction method and timing
- Creator ability to verify fees charged
|
Testing Protocol
- Payment flow verification: Request bank statements or payment processor records showing actual fund flows
- Creator interview: Verify creators understand where payments go and how they access funds
- Dashboard access: Request demonstration of creator's access to payment data
Merchant Assessment Checklist
- ✅ Payments flow directly to creator's merchant account OR
- ✅ If agency receives payments, creators have full transparency and real-time access to transaction data
- ✅ Payout schedules are reasonable (daily or weekly, not monthly)
- ✅ No excessive minimum thresholds or hold periods
- ✅ Creators can independently access payment processor data
- ✅ Agency fee collection is transparent and documented
Red flag threshold:
- Agency receives all payments first with no creator transparency = CRITICAL RISK
- Monthly payout schedules with high minimums = HIGH RISK
- Creators have no independent payment processor access = HIGH RISK
- Opaque fee deductions = MEDIUM RISK
4. Customer Relationship Ownership
Why it matters: Who owns the relationship with subscribers determines who's operating the platform.
Marketing agencies might help develop customer support processes, but the creator (or their staff) provides the actual support. When the agency manages all customer interactions, they're operating the platform.
High-Risk Relationship Patterns
Agency manages all subscriber interactions:
- Agency handles all customer support tickets
- Agency email addresses and phone numbers provided to subscribers
- Agency manages password resets, billing inquiries, and content access
- Creators have no direct contact with their subscribers
Why this is critical risk: Owning customer support means owning the customer relationship, which is platform operation.
Agency controls subscriber data:
- Agency holds subscriber lists and cannot share them with creators
- Creators don't know who their subscribers are
- Agency controls marketing communications to subscribers
- No independent access to subscriber analytics for creators
Why this is high risk: Control over subscriber data means the agency owns the business relationships, not the creator.
Subscriber relationship continuity:
- If creator leaves agency, they cannot take subscribers with them
- Agency retains subscriber relationships
- Subscribers are considered "agency customers" not "creator customers"
Why this is critical risk: If the creator cannot continue their business independently with their subscribers, they don't own the business - the agency does.
Acceptable Relationship Patterns
Creator manages customer relationships:
- Creator (or their designated staff) handles customer support
- Creator's contact information provided to subscribers
- Creator manages subscriber communications
- Agency might provide technical support tools but doesn't interact with customers directly
Creator owns subscriber data:
- Creator has full access to subscriber lists
- Creator can export subscriber data at any time
- Creator controls marketing to subscribers
- Agency may have access for administrative purposes but doesn't own the data
Portable relationships:
- If creator leaves agency, they can take subscriber relationships with them
- Subscribers are clearly "creator's customers"
- Agency relationship is terminable without losing business
What to Request from Merchant
| Customer support structure |
- Party responsible for handling subscriber questions
- Customer facing email or phone contact information
- Support ticket system access for agency and or creator
- Examples of historical support interactions
|
| Subscriber data access |
- Creator access to subscriber lists
- Ability for creators to export subscriber data
- Control over marketing communications to subscribers
- Subscriber analytics available to creators
|
| Relationship ownership |
- Subscriber handling if a creator leaves the agency
- Ability for creators to contact subscribers independently
- Disclosure to subscribers whether they subscribe to creator or agency
- Contract terms governing subscriber ownership
|
| Communication channels |
- Review of all customer facing communications
- Branding used on emails receipts and support pages
- Creator ability to communicate directly with subscribers
|
Merchant Assessment Checklist
- ✅ Creator manages customer support or has designated staff (not agency)
- ✅ Creator has full access to subscriber lists and data
- ✅ Creator can export and take subscriber relationships if leaving agency
- ✅ Subscribers know they're subscribing to the creator (not the agency)
- ✅ Creator controls marketing communications to subscribers
- ✅ Agency provides backend support but doesn't own customer relationships
Red flag threshold:
- Agency manages all customer support with no creator involvement = CRITICAL RISK
- Creator cannot access or export subscriber data = CRITICAL RISK
- Subscribers cannot follow creator if they leave agency = CRITICAL RISK
- Agency branding dominates customer communications = HIGH RISK
5. Contractual Relationships and Risk Allocation
Why it matters: Contracts reveal the substance of the relationship beyond marketing language.
Review actual obligations, rights, and risk allocation to understand who bears business risk and who can operate independently.
High-Risk Contract Terms
Non-compete and exclusivity:
- Creator cannot work with other agencies or work independently
- Creator cannot create content outside agency's control
- Non-compete extends beyond relationship termination
- Creator must provide all content exclusively to agency
Why this is high risk: Preventing independent operation means the creator is functionally an employee or dependent contractor, not an independent business owner.
Intellectual property retention:
- Agency owns or retains rights to creator's content
- Agency owns creator's stage name, persona, or brand
- Creator cannot use their own content independently
- Agency retains derivative rights
Why this is critical risk: IP ownership of the creator's work and identity indicates the agency is the business operator.
Subscriber list ownership:
- Contract states subscribers belong to agency
- Creator cannot contact subscribers after termination
- Agency retains all subscriber data
- No portability rights for creator
Why this is critical risk: Subscriber ownership determines business ownership.
Difficult exit terms:
- Long notice periods (6+ months)
- Financial penalties for termination
- Agency retains control during notice period
- Creator cannot take content, subscribers, or brand upon exit
Why this is high risk: If creators cannot reasonably exit the relationship, they're not independent businesses - they're tied to the agency's platform.
Compliance responsibility:
- Agency takes no responsibility for content compliance
- Creator bears all legal risk while agency controls operations
- Unclear who handles age verification, record-keeping, or platform compliance
Why this is medium risk: If the agency controls operations but takes no compliance responsibility, it's misallocating risk to avoid scrutiny.
Acceptable Contract Terms
Service scope definition:
- Clear list of services agency provides (e.g., "social media posting, analytics reporting, brand consulting")
- Services are advisory or administrative, not operational control
- Creator retains decision-making authority
IP and brand ownership:
- Creator owns all content and intellectual property
- Creator owns their brand, stage name, and persona
- Agency may have limited license to content for providing services
- Rights revert fully to creator upon termination
Transparent fee structure:
- Fees clearly stated and justified by services
- No hidden charges or surprise deductions
- Either flat fee or percentage based on documented services
- Fee structure is competitive with industry standard service rates
Reasonable termination:
- Either party can terminate with 30-60 days notice
- No excessive financial penalties
- Creator retains all content, brand, and subscriber relationships upon exit
- Clear process for transitioning out of agency relationship
Clear compliance allocation:
- Document who handles age verification (should be creator or clearly delegated)
- Who maintains required records (2257 compliance for US)
- Who is responsible for platform terms of service compliance
- Indemnification terms are balanced
What to Request from Merchant
| Contracts with creators |
- Full creator agreement with personal information redacted
- Sample agreement for new creators and for existing creators
- All amendments or addendums
- Any side agreements
|
| Termination process |
- Termination provisions
- Required notice periods
- Treatment of content brand and subscribers upon exit
- Examples of past creator exits and outcomes
|
| IP and ownership terms |
- Content ownership provisions
- Ownership of brand or persona
- Subscriber list ownership
- Data portability rights
|
| Compliance responsibilities |
- Responsibility for age verification
- Record keeping obligations
- Applicable platform Terms of Service
- Indemnification provisions
|
| Service scope |
- Detailed list of services provided
- Decision making authority between agency and creator
- Performance obligations
|
Merchant Assessment Checklist
- ✅ Service scope is clearly defined and limited to advisory/support functions
- ✅ Creator owns all content, IP, brand, and subscriber relationships
- ✅ Reasonable termination terms (30-60 days, no excessive penalties)
- ✅ Creator can exit and continue operating independently
- ✅ Fee structure is transparent and reasonable
- ✅ Compliance responsibilities are clearly allocated
- ✅ No non-compete or exclusivity preventing independent work
- ✅ Contract language describes an agency relationship, not employment or platform operation
Red flag threshold:
- Non-compete or exclusivity clauses = HIGH RISK
- Agency owns creator IP, brand, or subscribers = CRITICAL RISK (auto-decline)
- Termination is difficult or penalized excessively = HIGH RISK
- Vague or unlimited service scope = MEDIUM RISK
- Compliance responsibility unclear or misallocated = MEDIUM RISK
What Good Looks Like: The Compliant Agency Relationship
When all elements align properly, a legitimate marketing agency in the adult content space presents:
Documentation Package
| Business Structure |
- Clear business registration and defined corporate structure
- Transparent ownership and identification of beneficial owners
- Professional business address and operational presence
- Appropriate business licenses for marketing services
- No history of regulatory actions or unresolved compliance issues
|
| Creator Relationships |
- Contracts clearly define a limited service scope
- Creators retain control over content pricing and brand
- Creators own subscriber relationships and related data
- Reasonable termination terms allowing independent operation
- Fee structures are transparent and justified
|
| Operational Reality |
- Creators have independent access to all relevant platform accounts
- Payments flow directly to creators or creators have full payment transparency
- Creators manage customer relationships directly
- Agency provides advisory services without operational control
- Actual services provided match the stated contractual scope
|
| Compliance |
- Clear allocation of compliance responsibilities
- Age verification implemented by creator or formally delegated
- Appropriate record keeping for regulatory requirements
- Documented compliance with platform terms of service
- Risk management proportional to services provided
|
Example: Compliant Agency Profile
Company: Creator Success Agency
Model: Marketing and administrative services for adult content creators
Services provided:
- Social media strategy and posting
- Analytics and performance reporting
- Payment processing setup assistance
- Administrative support (scheduling, communications)
- Brand development consulting
Fee structure: Fixed monthly fee of $500-2,000 based on service tier (no percentage of revenue)
Creator relationship:
- Creator sets all pricing for their content
- Creator owns all content, brand, and IP
- Creator holds merchant account (payments go to creator directly)
- Creator manages subscriber relationships and support
- Agency invoices creator monthly for services
- Either party can terminate with 30 days notice
- Creator takes all subscribers and content if they leave
Compliance:
- Creator responsible for age verification (agency recommends tools)
- Creator maintains required records
- Creator responsible for platform terms compliance
- Agency assists with compliance processes but doesn't own responsibility
This profile represents acceptable risk for payment processing.
Common Classification Errors
Mistake: Taking the business name at face value
The problem: Assuming "Creator Marketing Agency" or "Content Management Solutions" is actually providing agency services without functional verification.
What to do: Examine operational reality - who controls content, pricing, payments, and customer relationships? Business name is irrelevant if operational structure indicates platform operation.
Mistake: Focusing only on the merchant of record
The problem: Accepting that because creators are technically the merchants of record, the agency must be just a service provider.
What to do: Look at who controls business operations. Merchant of record status can be structured for compliance appearance while the agency operationally controls the platform.
Mistake: Accepting boilerplate contracts without verification
The problem: Many operators use standard "agency agreement" templates describing advisory relationships while the actual business model involves operational control.
What to do: Verify actual operational practices against stated contract terms. Interview creators directly when possible. Request evidence of how the relationship actually functions day-to-day.
Mistake: Not interviewing the creators
The problem: Documentation can be crafted to present a certain picture. Only creators know how the relationship actually works.
What to do: When possible, speak directly with creators (with their consent) to verify:
- Do they make their own content and pricing decisions?
- Can they access their own accounts and payment data independently?
- Do they own their subscriber relationships?
- Can they leave and continue operating?
Mistake: Ignoring revenue split structure
The problem: Focusing on service descriptions while ignoring that 60% revenue splits resemble platform fees, not service charges.
What to do: Analyze whether the revenue split is justified by services provided. Compare to market rates for comparable services. High percentage splits often indicate platform operation.
The Critical Question
When evaluating whether a business is truly a marketing agency or an adult platform operator, ask:
"If this agency disappeared tomorrow, could the creator continue operating their business with minimal disruption?"
If yes - because the creator owns subscriber relationships, controls content and pricing, has payment access, and owns their brand - it's likely a legitimate agency relationship.
If no - because the agency controls platform access, owns subscribers, manages payments, controls content or pricing - they're operating the adult business, regardless of what they call themselves.
This single question captures the essence of operational control and business ownership.
Ballerine's Role
Ballerine provides the infrastructure to make this complex assessment manageable: automated website monitoring to detect when agencies add operational controls post-onboarding, ecosystem mapping to reveal connections between agencies and their creator networks, and payment flow analysis to verify who actually receives and controls funds.
But the foundational knowledge in this guide gives you the expertise to ask the right questions during merchant onboarding: whose merchant account receives subscriber payments, can creators export their subscriber lists, who sets the pricing, and what happens if the creator wants to leave. These operational realities determine classification, regardless of what the business calls itself.
For sophisticated risk assessment of agency merchants at scale, our merchant monitoring capabilities maintain visibility across your entire portfolio, detecting when legitimate service providers evolve into platform operators before regulatory exposure accumulates.
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