Paypal’s Objectionable Terms Are Back, $2500 Fines For Content They Don’t Like

Two weeks ago Paypal introduced language into its terms and conditions that allowed them to withdraw $2500 from your account for each time they believed you “promot[ed] misinformation” or you sent, posted or published “messages, content, or materials that, in PayPal’s sole discretion, (a) are harmful, obscene, harassing, or objectionable.”

If they deemed you to promote messages they objected to 10 times, or to have spread misinformation (in their sole discretion) 10 times, they could take $25,000 from your account. If your PayPal balance was $0 they presumably could withdraw funds from your linked accounts.

After an online backlash they pulled the language from their update. They called it a mistake, but it was a very specific mistake not an errant comma or language that was placed into the wrong section of the terms.

Then they waited two weeks for the attention to die down. And now they’ve put the policy back into the terms. The Paypal t&c’s now specify a $2500 fine per instance of violating their acceptable use policy, including transactions which in their sole opinion promote intolerance. Intolerance isn’t defined, and could be considered anything Paypal says it is.

When first introduced earlier in the month this policy was roundly criticized online, including by a former President of PayPal and by Elon Musk who himself is formerly CEO of PayPal.

There was a huge backlash against Paypal, including mass account cancellations, and Paypal responded by refusing to close accounts because the company believed people were cancelling based on misinformation and therefore wouldn’t comply. There’s Paypal deciding what’s misinformation, and what’s best for you again! Even though, of course, it wasn’t misinformation in the first place.

PayPal isn’t a service that many who have paid attention have trusted in a long, long time. Fundamentally however it’s not that PayPal has ‘gone woke’ or something like that, seeking to become disinformation czar. They (1) want terms and conditions which give them broad flexibility to respond to the twitter mob, and (2) more importantly to regulators [which often parrot the same].

Regulators push financial institutions to adhere to their own policy objectives, without legislation or even explicit regulation. They simply deem certain activities to be ‘risky’ or suggest that compliance with those objectives will make life easier or harder for the institution. That manifests itself in whom a lender might approve for a mortgage to where a bank places its branches. Regulators tell companies this is how they protect their reputation which is important for risk. But this has real costs to society.

Just as new merchant codes are a tool for tracking gun purchases, don’t be surprised to see some Red States push for a merchant code to track abortion services. Did you know that financial regulators want to impose climate change policy by considering it a risk to banks?

Already, anti-money laundering rules cost $7 million per conviction and that cost falls on financial intermediaries like banks and PayPal. That manifests itself in costs on accountholders, like minimum balance requirements, that keeps people out of the banking system according to the FDIC (and pushes them into using alternatives like costly check cashing stores).

Financial institutions aren’t actually seeking to fine their customers for ideas that the company objects to. They’re acting to protect their reputation, which is to say they’re acting to appease regulators who hold the key to an institution’s profitability and ability to conduct business.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. @jaybird I’m pretty freaking woke, and this bothers me, too.

    That said, I’m pro-choice, pro-gun Democrat living in California and trying to get a CCW permit, so I’m pretty much nuts.

  2. F Them
    And I am not one to say those kind of words
    They are one of the worst companies ever in my lifetime to do business with
    Sucked in by ebay
    The fact they own Venmo I refuse to participate ever.
    I dislike some companies
    However I despise Pay Pal and especially their management and subpar overseas customer service .Only thing worse is Uber and decades ago Nextel and possibly Sprint who may look barely acceptable by comparison.

  3. The business is free to set their policies and consumers are free to choose which companies to do business with. This is freedom in action.

  4. Businesses are not free to set any policy they like. Can you imagine a landlord stating: “If you say something we don’t like we can enter your apartment and take stuff from you”? Or perhaps a cotton farm owner say: “if you say something we don’t like you agree to become our slave and be chained”?
    You must be joking. These are 19th century tactics and are UNENFORCEABLE in a true court of law.

  5. This is absurd. It’s one thing to close an account but to fine an account holder and take funds from an account is stepping into the role of the judiciary. What’s even more dangerous is if an account can have their funds seized for actions or statements not tied to a business, website, or etc using PayPal but an individual exercising their free speech rights in public. Saying the Bible is true and the word of God is considered offensive, hateful, and intolerance by TPTB.

    I will continue to use PayPal as an individual and keep no more than $100 in it before withdrawing. Too many deals, rebates, money making opportunities or things like class action settlements use PayPal to pay so I won’t cut myself off from it. What I will do is never accept PayPal on a website for business. I don’t see how any small business owner would use PayPal with these terms.

    Taking money from a financial account is theft. States like Florida and Texas should be criminally indicting and arresting the entire senior leadership of PayPal if any resident of Florida or Texas has their funds seized. Arrest them when they transit through. Convene grand juries in every red county. Weaponize the legal system in red counties and states against the left. The left uses hand picked juries, leftist Soros prosecutors, and leftist judges. We should be doing the same.

  6. I’m not a lawyer, but refusing to cancel accounts bc of misinformation, when it turns out not to be misinformation, sounds like fraud in the inducement to me.

    “Fraud in the inducement occurs when a person tricks another person into signing an agreement to one’s disadvantage by using fraudulent statements and representations. Because fraud negates the “meeting of the minds” required of a contract, the injured party can seek damages or terminate the contract.”

  7. I waited to close my Paypal account I’ve had for decades but this is the final straw. Keep in mind that this same CEO also heads up NortonLifelock which can’t be good in ESG Woke terms.
    The only thing I can figure out is that this is being done to intentionally destroy their customer base. Maybe shorting the stock?

  8. FlyerTalk is a dictatorship, like PayPal’s clause. However, it’s just a small part of FlyerTalk, mainly Sweet Willie, the moderator of OMNI.

  9. Use cash app or whatever – who cares. They’re a boring company doing boring company things in a highly competitive marketplace.

  10. Have avoided paypal for years. Maybe time to disconnect linked accounts. But what to do about venmo??

  11. That’s right, folks, paypal will go broke from losing the business of those wielding trump / roy cohn sloganeering.

  12. This is what we call the “beginning of the end” for a company.
    People losing trust and respect for a financial company is a sure way for them to meet their demise.
    Such an ignorant move by Paypal.

  13. “Just as new merchant codes are a tool for tracking gun purchases”

    Time to tell Google I don’t need this blog appearing for me in News anymore. What a load of tinfoil hat nonsense.

  14. Then you see the bots and trolls from Twitter in the last two comments. There is no possible way to spin this positively unless you’re an absolute zealot. It’s not a political thing. It’s a basic trust in a financial institution, thing. A trust which is now completely gone.

  15. Can someone tell me what this has to do with travel?

    Are we now going to see articles about labor shortages in Pakistan affecting shoe production (because we all use shoes while traveling)?

    Focus, please — suggest starting a financial industry blog if that’s what you like writing about (I am sure it will be very, very good!)

  16. Correct me if I’m wrong, but isn’t that the definition of theft? I don’t use paypal much at all, maybe once a year. But this policy where they can just take your money without justification…welll I would be reporting it to the police as theft. What is really telling is that they could basically take the money out of your linked account? Then they refused to close accounts? What is defined as agreeing to these terms of service? This is a lawsuit just waiting to happen. We now have a corporation that has figured out how to make a profit without selling anything…just simply take the money out of the consumers bank account. If I did that, I would be charged with theft by deception. But let a corporation do that…and we agreed to it when we failed to close an account that the company wouldn’t let me close, so it is legal? The GOP and Dems need to go pound sand. We need financial regulation again, and we need to see a few CEO;s behind bars.

  17. Look what the left did to those who wouldnt obey the vaccine mandate…they were fired. Anything is possible when democrats are allowed to move freely, speak, or vote. Liberalism is treason.

  18. Not sure I understand rhe big picture here. PayPal can take money from you because of things you say on Facebook, Twitter, Yahoo, etc…..?? If I got this straight, how the hell do they know what you’re saying on any social websites?? Is that not theft? Do they make it legal by some fine print you OK’d for using PayPal without you ever having seen it? I know certain people that if they got their money taken from somebody that has no business stealing their money for something they said (which is none of their business to begin with) they might go find those people, and have a one way conversation with them.

  19. I’ve been trying to close my PayPal account for three weeks. They insist I have an open Xoom, Honey, or Venmo account (I don’t, uploaded screen shots of verifications from these companies – TWICE – to that effect) and they can’t do anything except lock my account, which removes my access but the account is still open. No thanks.

    Fortunately I was able to get my bank accounts and credit cards removed and cleared out all my authorizations, but they refuse to close my account. Today’s update was “We’re sorry for the inconvenience. Our team is working on a solution.”

    Has anyone successfully closed their PayPal account since they made this announcement?

  20. My daughter was carjacked last Christmas and the criminals (issue immediately reported to Venmo) demanded her passwords, transferred funds from her Venmo account and Venmo now says that she owes them $535. No one to call and talk to, just fake emails from a computer responding to your email.

    They knew that the account should have been shut down. You have to be off your rocker to do business with these criminals when there are plenty of wonderful local banks just down the street.

  21. It’s not the same of Paypal, but I opened up a GloriFi account. A company who’s looking to protect our finances. They have a solid app!

  22. Still can’t close my PayPal account, let me explain: PayPal requires that you close any partner count before you can close your PayPal account, including but not limited to their credit card and their credit account. I called PayPal credit to close my account but the AI constantly tells me to input my phone number associated with my account right after putting it in. I’m sure it’s not a coincidence that their phone system has an issue after many people want to close their accounts now. You can’t close accounts via email or chat either, so I’m literally forced to have an account with them That had to be illegal, right?!

  23. What PayPal announced in an updated acceptable use policy, effective Nov. 3, 2022, was that,

    “You may not use the PayPal service for activities that:…..” “Involve the sending, posting, or publication of any messages, content, or materials that, in PayPal’s sole discretion, (a) are harmful … or objectionable … (e) depict, promote, or incite hatred or discrimination of protected groups or of individuals or groups based on protected characteristics (e.g. … religion, gender or gender identity, sexual orientation, etc.) … (g) …. promote misinformation … or (i) are otherwise unfit for publication.”

    The update also stated,

    “Violation of this Acceptable Use Policy constitutes a violation of the PayPal User Agreement and may subject you to damages, including liquidated damages of $2,500.00 U.S. dollars per violation…”[99] [100]

    Obviously, since even posting what the Bible states regarding false gospels as well as illicit sexual unions and effects thereof can be subjectively judged in “PayPal’s sole discretion” as “harmful” or “objectionable” then this policy effectively can work to silence those whom PayPal autocratically judges to be politically objectionable.

    And while PayPal later said that it will not fine $2500 users who engage in “misinformation” or “hatred” against protected identities,” and that this language was never intended to be inserted in our policy, what PayPal removed is not fining people for misinformation, and it changed “activities that…. are harmful … or objectionable … (e) depict, promote, or incite hatred or discrimination of protected groups or of individuals or groups based on protected characteristics, ” into forbidding “the promotion of hate, violence, racial or other forms of intolerance that is discriminatory.” Its Acceptable Use Policy now states,

    Prohibited Activities You may not use the PayPal service for activities that:…relate to transactions involving… (f) the promotion of hate, violence, racial or other forms of intolerance that is discriminatory.

    Yet in PayPal subjective “sole discretion, “the promotion of hate, violence, racial or other forms of intolerance that is discriminatory” can easily translate into what was previously ambiguously described as activities that:…..” “Involve the sending, posting, or publication of any messages, content, or materials that, in PayPal’s sole discretion, (a) are harmful … or objectionable … (e) depict, promote, or incite hatred or discrimination of protected groups or of individuals or groups based on protected characteristics (e.g. … religion, gender or gender identity, sexual orientation, etc.) …

    And as the PayPal User Agreement also states,

    you must adhere to the terms of this Acceptable Use Policy. Violation of this Acceptable Use Policy constitutes a violation of the PayPal User Agreement and may subject you to damages, including liquidated damages of $2,500.00 U.S. dollars per violation, which may be debited directly from your PayPal account(s) as outlined in the User Agreement (see “Restricted Activities and Holds” section of the PayPal User Agreement).

    And the Restricted Activities and Holds” section of the PayPal User Agreement y states.

    If you’ve violated our Acceptable Use Policy, then you’re also responsible for damages to PayPal caused by your violation of this policy..You acknowledge and agree that $2,500.00 U.S. dollars per violation of the Acceptable Use Policy is presently a reasonable minimum estimate of PayPal’s actual damages – including, but not limited to, internal administrative costs incurred by PayPal to monitor and track violations, damage to PayPal’s brand and reputation, and penalties imposed upon PayPal by its business partners resulting from a user’s violation – considering all currently existing circumstances, including the relationship of the sum to the range of harm to PayPal that reasonably could be anticipated because, due to the nature of the violations of the Acceptable Use Policy, actual damages would be impractical or extremely difficult to calculate. PayPal may deduct such damages directly from any existing balance in any PayPal account you control.

    Moreover, the “Restricted Activities” in the above section includes providing,

    “false, inaccurate or misleading information” as one of the violations which can result in disciplinary PayPal actions, “If we believe in our sole discretion that you have breached this agreement or violated the Acceptable Use Policy.”

    Thus it remains that it is quite possible for PayPal to engage in the degree of punitive censorship that resulted in an outcry and PayPal modifying its Acceptable Use Policy.

  24. I’m paypal account has been limited sine Oct 2020. Tower 2 years. I have not used the account for all this time. I have requested it to be closed several times they refuse. It now says avaliable but they still refuse to close it. Asked straight out why were the stealing my money $9767.00 they say not be c abuse n it is there in my account. Sent opt-out iletter to legal new policies and procedures along time ago. Yet they still refuse to close account. Just another way to steal from their clients even after they told me I could not use PayPal. No explanation for not being their client not being able to use account.

  25. Pfft I’ll just use Cash app just like genZ does. genZ gonna shut these clowns down.

    Closing out my accounts this afternoon (business and personal). Ebay or Mercari doesn’t use them anymore anyhow so good riddance

  26. I deleted my account two weeks ago, I’m sick of companies telling me what I can and can’t say. I would encourage anyone else to as well, It’s an attack on free speech. Soon it will be illegal to offend someone.

  27. Seems from the comments that this policy has been around for a while. Has anyone been “fined” yet or are we just working ourselves into a lather over a hypothetical?

  28. I’m not really sure, that’s why I asked the question that I did. I’ve only used PayPal once or twice but have never heard of any such thing. At this point I’m choosing not to believe it. That’s why I asked.

  29. I don’t know what the original text said, but the current text (pasted below) applies only to sellers, and only to the sale of counterfeit merchandise/violation of intellectual property rights.

    Here’s the actual (current) text:

    If you are a seller and receive funds for transactions that violate the Acceptable Use Policy and said violation is associated with fraud or the sale of goods that are counterfeit or otherwise infringe on intellectual property rights, then in addition to being subject to the above actions you will be liable to PayPal for the amount of PayPal’s damages caused by said violation. You acknowledge and agree that $2,500.00 U.S. dollars per violation is presently a reasonable minimum estimate of PayPal’s actual damages – including, but not limited to, internal administrative costs incurred by PayPal to monitor and track violations, damage to PayPal’s brand and reputation, and penalties imposed upon PayPal by its business partners resulting from said violation associated with fraud or the sale of goods that are counterfeit or otherwise infringe on intellectual property rights – considering all currently existing circumstances, including the relationship of the sum to the range of harm to PayPal that reasonably could be anticipated because, due to the nature of the violation, actual damages would be impractical or extremely difficult to calculate. PayPal may deduct such damages directly from any existing balance in any PayPal account you control.

  30. They refused to close my account so I just cancled all attached credit, debit and bank account. Then cancled it a week later. For me this is not a left or right issue I am unafiliated, but I will not tolorate a company stealing from me. Microsoft refused to let me reinstal windows 2000 in 2003 because they claimed my copy was pirated, I switched to Linux and have never bought a Microsoft produce in the last 20 years. I was a lot harder to do that then it was to stop using PayPal! Refusing to use any products from them will be easy, No Pay Pal, No Venmo, No Honey, No Corprate Theft!

  31. PayPal also slow walked closing my account: four unproductive phone calls, innumerable message, and chats but I finally am finished with PayPal. I’m telling everyone I know what they’re up to.

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