Everyone Seems To Be Getting The Story About PayPal And Its Supposed $2,500 Fines For Misinfo Wrong

from the pay-who-for-what? dept

Over the years, we’ve posted so many different stories about questionable decisions by PayPal to cut off services from users it objected to, or even seizing the money in their account that it’s impossible to dig up all of those stories. But, by now, we’ve seen well over a decade of PayPal acting as some sort of morality police. It has every legal right to do so, though we could point out that there is much less competition for easy to use, consumer-friendly payment options. It is also an example of the trickiness that ensues when people look to infrastructure layer providers to get involved in content moderation.

Given all that, it wasn’t necessarily unprecedented, but still a bit shocking, to hear that PayPal had notified users of an updated Acceptable Use Policy that included two things that people (reasonably) connected, and then worried about. The first, was a new policy saying that (among other things) promoting “misinformation” was a violation of the policy.

The misinformation part got all the attention, but the whole policy is pretty broad:

involve the sending, posting, or publication of any messages, content, or materials, that in PayPal’s sole discretion, (a) are harmful, obscene, harassing, or objectionable, (b) depict or appear to depict nudity, sexual or other intimate activities, (c) depict or promote illegal drug use, (d) depict or promote violence, criminal activity, cruelty, or self-harm (e) depict, promote, or incite hatred or discrimination of protected groups or of individuals or groups based on protected characteristics (e.g. race, religion, gender or gender identity, sexual orientation, etc.) (f) present a risk to user safety or wellbeing, (g) are fraudulent, promote misinformation, or are unlawful, (h) infringe the privacy, intellectual property rights, or other proprietary rights of any party, or (i) are otherwise unfit for publication.

So… this actually reads like a fairly typical set of terms or acceptable use policies for lots of different websites, giving the sites broad leeway to ban you for a bunch of different things, totally at the discretion of the company and its own morals. Of course, you can make arguments for why lots of it is crazy. Depicting illegal drug use? So if you have created a short film that includes someone smoking pot, they can lose their PayPal account? Is kissing an “otherwise intimate” activity? And, of course, misinformation can mean very different things to very different people.

Of course, where this became viral as news is because people realized that PayPal’s Acceptable Use Policy already includes a claim that if you violate its policy they can take $2,500 from your account. While PayPal walked back some of these newly announced changes (we’ll get to that in a second), the policy about the $2,500 has existed for at least a year:

Here’s the policy I just grabbed from their website, showing it was last updated on September 20, 2021, with the $2,500 “liquidated damages” clause in there:

That notes that the policy dating back to at least September 20, 2021 includes the following:

You are independently responsible for complying with all applicable laws in all of your actions related to your use of PayPal’s services, regardless of the purpose of the use. In addition, 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).

So, some of the uproar over the weekend came from people seeing the new “misinformation” line and then the (already existing) claim about the $2,500 and assuming both were new and connected. Soon after much of this went viral (some driven by potentially disingenuous misinformation grifters who feared for their own livelihoods), PayPal insisted that the notice of the new policies “went out in error.”

“An AUP notice recently went out in error that included incorrect information. PayPal is not fining people for misinformation and this language was never intended to be inserted in our policy. Our teams are working to correct our policy pages. We’re sorry for the confusion this has caused,” a spokesperson told National Review in a written statement.

Lots of sites reported that PayPal had retracted its plan to fine people $2,500 for misinformation, but… the $2,500 amount is still in the policy. It’s just that the misinformation part is not going live… yet.

Of course, this raises another question: if the $2,500 liquidated damages thing has been in there since at least 2021… has PayPal ever actually done that? It seems like if it had, that would be a big story in its own right.

The fact that the $2,500 damages clause is still in the PayPal policy today still seems like a pretty big deal. Hiding the fact that a company might take $2,500 from you by burying it in an acceptable use policy no one is going to read seems like not a great thing, whether or not the policy includes “misinformation” as a triggering event.

PayPal’s statement about the misinformation bit is also… difficult to believe. The idea that it was “never intended to be inserted in our policy” doesn’t explain how it was inserted in the policy that was sent out to users. I would think that a company as large as PayPal has, you know, a few lawyers who look over this stuff before they update their policies. It seems clear that somewhere along the line someone at PayPal did very much intend to have this kind of policy, it’s just that they probably didn’t realize that they were putting it into the same section that included the threatened $2,500 cash grab.

My guess is that PayPal has that $2,500 number in there just in case they come across a more egregious situation, but I’m not sure even that justifies this kind of policy, especially where there is no real affirmative agreement with users that they know they’re putting that much money on the line.

PayPal can do whatever it wants, of course, but the sneaky $2,500 threat seems like really bad and confusing policy. The temporary inclusion of misinformation also seems somewhat sketchy, but could make sense in other contexts. Walking back the misinfo part without walking back the $2,500 part seems like the real problem.

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Companies: paypal

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Comments on “Everyone Seems To Be Getting The Story About PayPal And Its Supposed $2,500 Fines For Misinfo Wrong”

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James Burkhardt (profile) says:

Re:

I continue to struggle with the ‘social credit score’ commentary. I don’t see anywhere paypal generates a single universal metric out of this data, nor that it shares this metric with others. Is the complaint that a company might remember you violated its policy and act on that?

Anonymous Coward says:

Re: Re:

I know Paypal is scummy but “working with China” levels of scummy? Especially when China wants to force a digital central currency on its citizens?

Now that’s a hell of a scoop for any reporter who has the actual deets. Could even be worse than Project Dragonfly, and that was an actual thing Google tried to do.

Rekrul says:

I don’t have a PayPal account. The only time I’ve ever used PayPal is paying for things on eBay, so I’m not very familiar with how they work.

I assume that you can transfer money out of your PayPal account, right? I mean, what’s the point of having an account that receives money if you can’t take that money out of the account. So what happens if you regularly transfer all the money out of your account so that there’s nothing for them to take?

And assuming that you can just transfer the money out of your account any time you want, why would anyone leave money in a PayPal account, given PayPal’s scummy reputation?

This comment has been deemed insightful by the community.
Anonymous Coward says:

Re:

So what happens if you regularly transfer all the money out of your account so that there’s nothing for them to take?

Careful with that: are you sure they can’t pull money back from wherever you transferred to?

Paypal has a long, long history of stealing people’s money, or at least locking it up for long periods of time. For example: “In September 2010, PayPal froze the account of a Minecraft developer, Markus Persson. Persson stated publicly that he had not received a clear explanation of why the account was frozen, and that PayPal was threatening to keep the money if they found anything wrong. His account contained around €600,000.” It was old news by then: I knew people 20 years ago who opened bank accounts just for Paypal, out of fear Paypal might drain any linked account.

tam says:

Re: Re: connected account

I have only one account connected to Paypal. it’s a savings account and I keep $25 in it. The account can not be overdrawn. so I sort of feel safe.
My question would be, no one posts stuff on Paypal, it just captures payments. It is not a social media platform, so are they trolling our social media accounts to find these offences?

Dooger says:

Re: Re:

PayPal usually puts a hold (weeks up to months) on large amounts of funds received. If you are receiving $50 or $100 every so often, there likely won’t be a hold. But if you actually use your paypal for business, and receive thousands a month, PayPal doesn’t let you withdraw all of it right away.

You can read horror stories of people who had their entire PayPal account funds frozen/taken. PayPal has long removed accounts for political reasons, freezing funds along the way. If you were selling a book on your website, and using paypal, and the cancel mob spammed paypal? Yeah, you’re f’ed…

Hell, PayPal not only will take all the money in your PayPal account for any arbitrary reason they say, they will sometimes try and go after money through your connected checking/savings account.

They tried to do this to me, after a dispute on eBay. The dispute happened some months after an item was sold, so the money had already been removed from PayPal. Still, they were keen on taking the money back, but a simple call to my bank and “Hey, I need a new account number”. solved that for me. They never got a penny.

Of course, I received debt collectors mailings for a couple years after. I always mailed back asking them to prove I owed it (to which they would sell the debt to another company).

BernardoVerda (profile) says:

So… I don’t keep money in my PayPal account, precisely because of endless stories about how PayPal abuses its position, sometimes to enforce their private morality, and sometimes, apparently, “just because”.

But now I’m wondering… if you don’t keep money in your PayPal account, can PayPal just grab it via your linked credit card?

Anonymous Coward says:

The wrong Juxtaposition

I think folks are juxtaposing the wrong phrases. Try this:

Violation of this Acceptable Use Policy [..] may subject you to [..] liquidated damages of $2,500.00 U.S. dollars per violation…

involve the sending [..] of any messages [..] that in PayPal’s sole discretion [lists several reasons you might not find offensive, … or] are otherwise unfit for publication.

Write a crappy term paper and post it to Medium? That’s $2,500. Oppose our candidate for president via a parody web site? $2,500, please. Write a twitter thread criticizing PayPal? That’s $2,500 per tweet. Remember, we decide what a violation is, and we can land them on you as a block to “liquidate” your account for you if we want to.

Anonymous Coward says:

As far as I can tell, this is a badly worded way for Paypal to claw back monies from transactions that are misleading. e.g. someone buying what they think is a kitchen table only to find it’s a dolls house table when they receive it. A lot of this type of scam goes on especially at websites like Ebay.

The ‘misinformation’ part is to do with misleading ads or sales blurbs about the scam product.

This comment has been deemed insightful by the community.
Anonymous Coward says:

So many violations

It sounds like, if enforced:
The nudity clause would block using PayPal to donate to art museums and wikipedia
The depicting drug use clause would block using PayPal to subscribe to any streaming service that has Breaking Bad, Scarface, or a bunch of other films and TV shows
The depicting violence or criminal activity would expand that to just every streaming service

Tanner Andrews (profile) says:

Re: Reason to Arbitrate

Paypal arguing in arbitration that $2500 liquidated damages is a reasonable amount and not an unenforceable penalty

That is why you go to arbitration. No sane judge or jury would find that to be a reasonable estimate of damage, and so it would be a penalty. But an arbitrator is going to rule for the ``frequent flyer” that pays him regularly. That is paypal, not paypal’s offended customer.

Arbitration is evil. You should opt out when you can.

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