PayPal Policy Update Finally Removes $2500 Misinformation Fine
PayPal came under fire last month for planned changes to their Acceptable Use policy that would have applied damages of $2500 per violation to an increasingly broader and more subjective list of prohibited activities which expanded to include "misinformation" and anything PayPal deemed to be harmful or objectionable.
Liz Morton ~ Founder
After receiving massive pushback and viral social media campaigns urging users to #DeletePayPal, the company backtracked and removed the additional language about misinformation (point #5 above) but kept the $2500 damages for violations of the AUP which had been in place for years before the recent uproar.
However, that was still not enough to quell the outrage and it appears that on October 29, 2022 PayPal finally completely removed the part about $2500 damages from the Acceptable Use Policy page.
https://www.paypal.com/us/legalhub/acceptableuse-full
The previous policy said:
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).
The new version as of October 29, 2022 says:
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.
However, it's important to note that last sentence where they simply point to the full User Agreement - are the $2500 damages still listed there?
Oddly enough, the User Agreement has also been changed, effective November 7, 2022.
I ran a comparison on the full 60 page user agreement from September 19, 2022 vs the newest version from November 7, 2022 and there is only one section that changed.
Here's what the User Agreement said about the $2500 previously.
And here's what it says today, November 11, 2022:
Literally the only thing that has been changed in this update is PayPal added language to specify the violation of the Acceptable Use Policy must be associated with fraud, counterfeit goods or IP infringement in order to be subject to the $2500 damages.
Old version:
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...
New version (emphasis mine):
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
This change effectively limits the $2500 "fine" so that it cannot be used to prohibit speech the company deems as harmful, objectionable, or "misinformation" without clear association with fraud, counterfeit goods, or infringement of intellectual property rights.
I highly suspect in addition to public outcry and account cancellations, investigations by House Republicans and possible regulatory scrutiny from the Consumer Financial Protection Bureau played a significant role in this latest User Agreement update.
Liz Morton ~ Founder
Is this about-face enough to convince you to stick with PayPal or reopen your account if you previously canceled? Let us know in the comments below!
