Today I fielded a call from Adrian Christie of Paypal Australia who contacted me after hearing from a journalist in Australia.
He assured me that Paypal would investigate every instance on the
http://coldcopy.com.au website and would shut down sites in violation
However he did not seem to get the fact that these sites are so uncontrollable in what can be uploaded and shared that even if there is no violation today, there could be tomorrow.
File Sharing sites need to be added to the list of sites that Paypal prohibit in their AUP.
He indicated he might provide a formal response and if he does I will post it to the website.