PayPal Backtracks on ‘Misinformation’ Fine After Thousands Close Their Accounts

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Last Updated on October 9, 2022

PayPal has walked back an update to their acceptable use policy that would have fined accounts $2,500 for violating its policies on promoting “misinformation” and “hate, violence, racial or other forms of intolerance that is discriminatory.”  The payment processing giant has since walked back the policy update after massive backlash, claiming the draft was the result of an “error.”

According to a report from the Daily Wire, PayPal was set to expand its “existing list of prohibited activities” on November 3.

Among the proposed changes were prohibitions on “the sending, posting, or publication of any messages, content, or materials” that “promote misinformation” or “present a risk to user safety or wellbeing.” Users were also to be barred from “the promotion of hate, violence, racial or other forms of intolerance that is discriminatory.”

The company’s existing acceptable use policy does not mention these restrictions.

According to the proposed policy update, decisions were to be made at the “sole discretion” of PayPal and may subject the user to “damages” — including the removal of $2,500 “debited directly from your PayPal account” per offense.

The company’s user agreement contains a provision under which users acknowledge that the figure is “presently a reasonable minimum estimate of PayPal’s actual damages.”

PayPal claims that this figure accounts for the company’s administrative costs for tracking violations, as well as damage to the company’s reputation.

“Under existing law, PayPal has the ability as a private company to implement this type of viewpoint-discriminatory policy,” Aaron Terr, a senior program officer at the Foundation for Individual Rights and Expression, told the Daily Wire. “Whatever motivation PayPal has for establishing these vague new categories of prohibited expression, they will almost certainly have a severe chilling effect on users’ speech. As is often the case with ill-defined and viewpoint-discriminatory speech codes, those with unpopular or minority viewpoints will likely bear the brunt of these restrictions.”

The move sparked intense backlash, with thousands taking to social media in order to announce that they had closed their accounts while urging others to do the same.

PayPal has closed the accounts of a number of prominent conservatives, COVID-19 vaccine skeptics and other purveyors of viewpoints deemed problematic by company brass.

The announced policy came just days after PayPal de-platformed a British parents group that fought back against COVID school closures. In an interview with the Telegraph, the group UsForThem said it has been unable to access thousands of pounds in donations from its account after PayPal said it discontinued service to one of the group’s directors for allegedly violating the company’s user agreement. The group has thoroughly denied PayPal’s allegations.

The payment processing giant also closed three accounts canceled three accounts linked to Toby Young, a commentator who runs a nonprofit called Free Speech Union. Roughly one-third of Free Speech Union members rely upon PayPal to process their membership dues — although the company gave no explanation to Young for the suspension beyond mentioning a breach of the acceptable use policy, the Daily Wire reported.

According to Young, PayPal had originally told him that he had violated its policy regarding the promotion of “hate, violence or racial intolerance,” then walked that back and claimed he had spread “COVID-19” misinformation.

PayPal later restored the accounts after backlash from lawmakers. The company then apologized to Young for “any inconvenience caused,” according to a report from The Telegraph.

On Saturday afternoon, PayPal responded to the backlash and claimed that the draft policy was the result of an “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… We’re sorry for the confusion this has caused,” the company wrote in a press release.

The retraction came after thousands pledged to permanently delete their PayPal accounts. Elon Musk — a founder of the company — announced his opposition to the policy on Saturday morning, agreeing with a Twitter user who argued that it stifled free speech.

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