PayPal released a policy change on September 26 that punishes users for misinformation or promoting information that poses a risk to others’ well-being.
On October 7, a Daily Wire report exposed the proposed policy change, sparking a huge backlash. The policy was rescinded by PayPal the next day, October 8. The proposed policy would have gone into effect on November 3rd and fine users up to $2,500 per rule violation.
In the past, PayPal and Venmo, a subsidiary of PayPal, banned users from conducting business on their financial platforms due to “misinformation.” The Daily Wire, a conservative news outlet, claims that the bans discriminate against those with conservative political views. Banned accounts include Toby Young of Free Speech Union and Gays against Groomers.
Since Friday, PayPal has faced immense scrutiny and has been trending on Twitter for days. A common post among users is a screenshot of removing all their funds from their PayPal/Venmo accounts or swearing never to use the service again.
After the report alleging PayPal’s user misinformation fine, PayPal’s stock has dropped from $94 per share to $90 per share – a 4.5% decrease in stock value.
PayPal, created in 1998, has been the financial bloodstream of internet commerce since acquired by eBay in 2002 for a whopping $1.5 billion. Although no longer a subsidiary of eBay, PayPal has continued to acquire various e-wallet companies such as Hyperwallet, Venmo, and iZettle. In 2021, PayPal generated $25.3 billion in revenue due to moving $1.2 trillion in transaction volume.
Critics of PayPal’s misinformation policy claim it is ill-defined and would have a huge impact on the free speech of users.
According to Aaron Terr, a senior program officer at the Foundation for Individual Rights and Expression, “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.”
As a private company, PayPal is not responsible for adhering to free speech codes and would not be the first company to ban others for speech. Many big tech platforms have banned users for their speech, most notably former President Trump following the January 6 riots. The difference between de-platforming and PayPal’s proposed amendment is that PayPal would be the first to impose outright financial penalties against its users.
Terr may be against the former policy, but such a policy has its proponents. Many claim that misinformation aimed directly at vulnerable groups may be a way for users to promote “stochastic terrorism” — words used to demonize a group or individual and push others towards violent actions.
In a Press Watch article named The phrase you’re looking for is “stochastic terrorism” journalist, Dan Froomkin attributes January 6, the election of Donald Trump, and the radicalization of a man who murdered Mexican immigrants to stochastic terrorism. Froomkin states, “The key, going forward at least is to identify, call out and condemn stochastic terrorism by name and explain the likely consequences, in real time — not just when the inevitable violence takes place.”
PayPal has since reversed its plan to fine users for misinformation.
