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No, PayPal Did Not Resurrect Its ‘Misinformation’ Penalty

Financial Twitter is again abuzz over rumors that PayPal, the world’s third-largest payments platform, has reinstated a controversial policy to fine its users for “misinformation.”

The uproar, however—which has drawn in many popular crypto influencers—appears to be over old news.

BREAKING: 🛑 PayPal has brought back the $2,500 fine for speech they don’t like.

First they said it was a mistake.

Now they sneak it back in with different language.


Bitcoin Archive 🗄🚀🌔 (@BTC_Archive) October 27, 2022

At issue is a passage within PayPal’s “Restricted Activities” section of its user agreement, which states that users who violate its Acceptable Use Policy are liable to pay a minimum of $2,500 in damages.

The Acceptable Use Policy includes a list of “prohibited activities,” which include transactions related to “the promotion of hate, violence, racial or other forms of intolerance that is discriminatory.”

Twitter user Jeremy Knauff called attention to the passage on Tuesday, claiming that PayPal had effectively reinstated a “misinformation” clause that attracted widespread criticism earlier this month—a clause that PayPal retracted after saying it had been published “in error.”

Remember the draconian clause PayPal added to its TOS a couple of weeks ago that would enable them to steal $2,500 from your account every time you post anything they don’t like? Well, after the widespread criticism died down, they put it right back in.

— Jeremy Knauff (@jeremyknauff) October 25, 2022

“The term ‘other forms of intolerance’ is so broad that it legally gives the company grounds to claim that anyone not fully supporting any particular position is engaging in ‘intolerance’ because the definition of the word is the unwillingness to accept views, beliefs, or behavior that differ from one’s own,” claimed Knauff in an article on the matter.

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In reality, however, the “misinformation” clause was not reinstated, nor have any other changes been made to the policy page since PayPal’s retraction a week ago.

As detailed by KellyKga on Twitter, the controversial passage that was published on October 7—and removed the next day—sought to prevent users from using PayPal for activities that involve “the sending, posting, or publication” of content that met certain criteria.

Listed among those criteria were content materials that are, according to PayPal, “harmful, obscene, harassing, or objectionable,” or which “promote misinformation,” among other things. This entire passage had been removed from the Acceptable Use Policy and is now only available through internet archives.

By contrast, the clause that Knauff and others took issue with this week isn’t a new policy at all. Both the list of prohibited activities and the associated $2,500 fine have existed since September 2021.

It seems the $2,500 in damages section and the long and broad list of prohibited activities dates back to September 2021 (last year).

— Kelley K (@KelleyKga) October 27, 2022

Yet the story gets even more complicated: While Paypal’s current Acceptable Use Policy contains no mention of “misinformation,” its user agreement essentially does—and has since at least February 12, 2022.

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The agreement reads that PayPal users may not “provide false, inaccurate or misleading information,” in connection with PayPal, its website, services, or “third parties.” Those who do so may see their accounts suspended, limited, or closed, and PayPal may take legal action.

In short, no surprise changes have been made to PayPal’s policy this week. While the company does levy punishments toward users for certain forms of “misleading statements” under its user agreement (and has for months), a $2,500 fine is not explicitly one of them.

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