PayPal just retracted a new $2,500 fine that it was planning to introduce. Here is what you need to know…
PayPal Retracts New $2,500 Fine After Backlash!
On Sunday, October 9, 2022, PayPal quickly retracted a new policy that would have allowed it to fine its users $2,500 for spreading misinformation.
But instead of apologising for planning to introduce such the $2,500 misinformation fine, PayPal claimed that the updated Acceptable Use Policy (AUP) was released “in error”.
This awkward, inelegant reversal came after the potential policy changes drew media attention, and much criticism on social media.
Even former PayPal President David Marcus came out to blast the company over its plans to fine its customers if it disagrees with their views.
Tesla CEO Elon Musk tweeted his agreement with Marcus, “Agreed“.
Even though PayPal reversed its course, it doesn’t sound like it understood why so many came out so strongly against the new AUP. Its response was tone deaf and obtuse.
The $2,500 Misinformation Fine PayPal Wanted To Introduce
The $2,500 misinformation fine was part of a major update of the PayPal Acceptable Use Policy (AUP) that was supposed to take effect on November 3, 2022.
PayPal wanted to expand its existing list of prohibited activities to include the “sending, posting, or publication of messages, content, or materials that meet certain criteria.”
PayPal’s prior policy already forbade “hate”, “intolerance”, and discrimination, but the new policy would explicitly be applied to specific “protected groups” and “individuals or groups based on protected characteristics” like race, religion, gender or gender identity, and sexual orientation”.
Those who break the new rule against misinformation and hate speech may be subjected to “damages, including liquidated damages of $2,500.00 U.S. dollars per violation, which may be debited directly from your PayPal account“.
In other words, if PayPal determines that you are spreading misinformation, it has the right to deduct $2,500 from your account, for each violation.
The new AUP would require users to agree to accept that the penalty is “presently a reasonable minimum estimate of PayPal’s actual damages” for the violations, as well as damage to its reputation.
While I hate fake news creators, and have spent countless hours writing fact check articles, this is a step too far. There is simply no check or balance in the new PayPal AUP.
History has shown that tech companies make tons of mistakes in detecting and deciding on what is fake news, and what’s not. Some of my fact check articles have been labelled by Facebook, LinkedIn and even Google as fake news, and it takes considerable effort to get them checked and whitelisted.
Is PayPal going to compensate those who it wrongly decided has contravened its AUP for misinformation? Is there even an avenue for aggrieved parties to easily and quickly dispute such actions?
Nothing PayPal has done shows that any forethought went into this new AUP. It is therefore not surprising that even FCC Brendan Carr came out to describe this as “Orwellian”.
The best solution to this problem is to do what venture capitalist David Sacks advised – “Get your money out of PayPal right now”
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