Earlier in October, social media was aflame with anger and surprise that PayPal had sent out a notice of terms of service amendment that would include that they could take $2,500 from any of their customers that participated in any online content that they deemed inappropriate, including the spreading of misinformation. Well, after saying it was a mistake, it is back again.
PayPal Reinstates the Clause to Charge You for “Intolerance”
Here is the pertinent part from the original policy update that was to go into effect on November 3, 2022 (bolding mine):
- 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 intimateactivities, (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.
The penalty for this?
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
PayPal walked it back in a hurry, claiming that it was misinformation (ironic that they were spreading what they said was misinformation about fining customers who spread what they determined would be misinformation).
We all knew it would come back and come back it did. Here is the updated policy, as spotted by Grit Daily:
The Penalty – $2,500 per incident
- If you are a seller and receive funds for transactions that violate the Acceptable Use Policy, 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 your violation of the Acceptable Use 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.
So, what is their Acceptable Use Policy?
Among other things:
- relate to transactions involving (a) narcotics, steroids, certain controlled substances or other products that present a risk to consumer safety, (b) drug paraphernalia, (c) cigarettes, (d) items that encourage, promote, facilitate or instruct others to engage in illegal activity, (e) stolen goods including digital and virtual goods, (f) the promotion of hate, violence, racial or other forms of intolerance that is discriminatory or the financial exploitation of a crime, (g) items that are considered obscene, (h) items that infringe or violate any copyright, trademark, right of publicity or privacy or any other proprietary right under the laws of any jurisdiction, (i) certain sexually oriented materials or services, (j) ammunition, firearms, or certain firearm parts or accessories, or (k) certain weapons or knives regulated under applicable law.
They have purposely left that open and vague so they are the ones that determine what is considered a form of intolerance. Selling a book they don’t like? Fined. Selling a t-shirt with a slogan they don’t like? Fined. And it isn’t just with the sale using PayPal. They started that section by saying “relate to transactions involving” so it doesn’t have to be the transaction itself, just in relation to it.
Let’s see what happens when this gets out again. The amount of account deletion requests were so great that PayPal just stopped following them. They lost ground in their stock price and their overall image took a hit (which, oddly enough, is also grounds for the fine – if something is done that makes them look bad). Wonder what they do about that?
PayPal has built itself into the premier collection of money online for easy transactions and they know it. I am making a product right now and have been told that if I don’t have PayPal, I could lose out on 60% of the potential sales due to people’s comfort and familiarity with PayPal. Obviously, they know this and they know the flex they have.
I am against hateful speech but I am not ok with a business telling all of us how they define “other forms of intolerance” and fining their own customers for going against them. Notify customers they are closing their accounts? That is one thing and perfectly within their bounds as a business to do. Fine them and take $2,500 from their account or bank account for it? No, that is not acceptable.
I wonder if all my stuff on this post will be considered “intolerance” of PayPal…
For proof that this is a thing, look no further to what happened to Toffer Team. They did a kickstarter to fund a series of adult-oriented games called Lewd Idol Project, and had put the money on Paypal.
One day, Paypal blocked the account and only released after ~6 months, with multiple “Acceptable Use Policy”-related charges being made on the account during the period and leaving a net balance of ZERO.
PayPal has long been a terrible company, and this is just another nail in their coffin for me. Thanks for sharing