PayPal Scandal Nowhere to Be Found on TWIT¿

I’ve been listening to all the shows…and crickets.

Why is no one on TWIT talking about PayPal? It’s one of the biggest scandals in fintech history!

Did I miss it?

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It didn’t seem like it made as much of a splash as you might have suspected. Techdirt did write about it though:

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That story was odd. People saying it was a new policy that PayPal WOULD take $2,500 of your money.

When you looked at it, it was in the business accounts AUP only, wasn’t new, and it was to cover PayPal’s damages and MAY be taken.

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It doesn’t matter if they would. The problem and issue – – which is now being investigated by the government – – is that they could. No financial services organization has the right to deduct money from your personal or business account on the basis of their opinion of free speech. I received the email and it clearly said if you propagate misinformation we will fine you $2500. That’s why tens of thousands of people have closed their PayPal account, including me. The sad part is that the language is still there for hate speech, etc. and it’s still illegal for them to do this, i.e. deduct money from your business account at their discretion of what is or is not offending speech. We’ll see how this plays out.

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If you agree to a penalty in a contract, then I don’t think legality has any bearing, beyond contract law. The question of whether it’s legal for them to offer such a contract may be an issue, but as this has been around in their contract for over a year, it seems likely their lawyers knew what they were doing. If you have indeed closed your account, that absolved you from the contract, and that was your best move. Nothing else is going “play out” (in your words) unless they try to make use of that clause of the contract, and so far, if they have, there has been no [public] word of it.

I see PayPal say the email was sent in error. I wonder if the error was the proposed policy change, the wording (describing it as a fine) or who it was sent to. Are you a business PayPal user @IdeaMan ?

The 2021 AUP is unchanged, and still has the $2,500 damages in it.

When I heard about it, it was too late to discuss on TWiG


I am pretty careful to avoid stories that haven’t been well supported or don’t pass the sniff test. This one seemed a lot like a big panic over nothing, and it was.


I was a business PayPal user, but only for a few things, so closing the account wasn’t that bad for me. Only a took a few minutes.

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But they had just changed that language to include “misinformation,” which was the controversy. They have kept the previous language (which no one ever read and now has been alerted to) regarding “hate speech.” The question is, does a financial tech company who you are trusting with your money have the right (contract or not), to deduct money from a linked business card or account based on what they “deem” to be offensive speech? And who governs them? I know I wouldn’t want anyone to deduct $2,500 out of my business account if I accidentally said a brown turtle was green. Just my opinion (and that of many others).

It’s all kinda hairy to me, and I am not a lawyer, so I don’t know how common language like this is contained in agreements like that. The interpretation of the contract/terms of use would be up to lawyers, if someone could build a counter-case. I haven’t read the terms, so I don’t know if, or how, they defined the various terms, such as misinformation. If you think about the most likely situation, if taking that level of money hurts an individual, then they probably don’t have the money to pay a law firm to fight back. So the only likely eventual fight would have to be a class action, and that would presume they fined many people. One would presume they were not looking to become a speech policing entity, it was more likely meant to be used very rarely, and only if the event escalated to a public level.