Yes, and it kicked off the Montgomery Bus Boycott. Not slashing tires or road blockades.
http://en.wikipedia.org/wiki/Montgomery_Bus_Boycott
> Under a 1921 ordinance, 156 protesters were arrested for "hindering" a bus, including King. He was ordered to pay a $500 fine or serve 386 days in jail.
A boycott is only effective if the disgruntled group has enough population to affect the business of the target. There in lies the problem with a DDoS attack. It is not a symmetrical response. A small group of people could execute such an attack, while the majority of actual customers may not have an issue with their actions.
When it comes to oligopolies, the usual rule of corporations as private, independent entities that can do whatever they please, goes out the window.
Must they also offer service to companies with bad credit or a history of fraud?
That said, Paypal is not making nearly enough on transaction fees to cover wasting a single minute of a lawyer's time. If there's even a chance of there being legal issues with an account holder, it's almost certainly in their business interest to end that account.
There doesn't even need to be explicit conversation between government officials and Visa/MasterCard for there to be a conspiracy; it's more of a matter of a gentleman's agreement to cover each other's backs.
I don't like that they've denied them service, but I believe it is and should be perfectly legal for them to do so. Can you explain why you think it should be illegal?
A market that's guarded by a couple of monolithic entities with similar interests is not open, and without credit card transactions a lot of international business is essentially impossible. I believe that's too critical an issue to be left to the whims of corporations.
The situation would be very different if we had dozens of easily available credit card providers who would take our money with no hassles. Whether you consider that a failure of the states or the corporations is no the issue at hand. The problem is one of assigning too much power to aisngle entity.