PayPal Didn’t Reinstate Their “Misinformation” Policy. It Was Already There Since 2021

Photo credit: Nopparat Khokthong, Shutterstock.com, licensed.
The AUP clearly states that these rules only apply to sellers “in the course of your interactions with PayPal, other PayPal customers, or third parties.” Photo credit: Nopparat Khokthong, Shutterstock.com, licensed.

SAN FRANCISCO, CA – Earlier in October, online payment website PayPal faced a major public relations crisis when they new changes to their Acceptable Use Policy (AUP) were discovered, which stated that the online payment website would dole out automatic fines to the tune of $2,500 if users of their service were guilty of spreading “misinformation.”

After facing intense backlash, PayPal quickly backpedaled, stating that the update to their AUP was an error, and that no fines will be imposed upon users. Online anger eventually began to wane, but reports surfaced again late this week that the company had once again attempted to sneak in the aforementioned “misinformation” fine back into their AUP.

However, these reports were quickly proved to be incorrect, as PayPal didn’t reinstate their “misinformation” penalty; it’s actually already been there for over a year, although it appears to have been misinterpreted by some as pertaining to curtailing free speech.

The erroneous reports from this week had mistakenly referred to a section of PayPal’s AUP that was originally added in September 2021 under the “restricted activities” section, the company does indeed threaten a fine of “$2,500.00 U.S. dollars per violation” against sellers, although it is not made clear which violations could result in a fine. Other listed potential punitive measures against sellers include having their accounts suspended, limited, or closed, and PayPal may take legal action.


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Possible punishments can be levied against sellers for numerous offences, including violating any law, statute, ordinance, or regulation; selling counterfeit goods; acting in a manner that is defamatory, trade libelous, threatening or harassing; and many more.

However, the one violation that has put people in an uproar this week pertains to providing “false, inaccurate or misleading information,” which some have interpreted as PayPal attempting to police free speech outside of the context of a business relationship.

However, the AUP clearly states that these rules only apply to sellers “in the course of your interactions with PayPal, other PayPal customers, or third parties.” That is very likely interpreted as the company telling sellers not to deceive PayPal or their customers about the goods and/or services they are providing.

A valid argument could be made that the “false, inaccurate or misleading information” statement could be taken as very broad on PayPal’s part, and that it leaves room for them to police the speech of its customers. However, the text in the AUP is pretty clear and doesn’t mention anything about “false, inaccurate or misleading information” outside of the context of selling items or services, nor is any mention made of the seller’s behavior on their own personal time.

The exact same clause about “false, inaccurate or misleading information” was also added to PayPal’s user agreement on February 12, 2022.

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