From View from the Wing
Two weeks ago Paypal introduced language into its terms and conditions that allowed them to withdraw $2500 from your account for each time they believed you “promot[ed] misinformation” or you sent, posted or published “messages, content, or materials that, in PayPal’s sole discretion, (a) are harmful, obscene, harassing, or objectionable.”
If they deemed you to promote messages they objected to 10 times, or to have spread misinformation (in their sole discretion) 10 times, they could take $25,000 from your account. If your PayPal balance was $0 they presumably could withdraw funds from your linked accounts.
After an online backlash they pulled the language from their update. They called it a mistake, but it was a very specific mistake not an errant comma or language that was placed into the wrong section of the terms.
Then they waited two weeks for the attention to die down. And now they’ve put the policy back into the terms. The Paypal t&c’s now specify a $2500 fine per instance of violating their acceptable use policy, including transactions which in their sole opinion promote intolerance. Intolerance isn’t defined, and could be considered anything Paypal says it is.
When first introduced earlier in the month this policy was roundly criticized online, including by a former President of PayPal and by Elon Musk who himself is formerly CEO of PayPal.
There was a huge backlash against Paypal, including mass account cancellations, and Paypal responded by refusing to close accounts because the company believed people were cancelling based on misinformation and therefore wouldn’t comply. There’s Paypal deciding what’s misinformation, and what’s best for you again! Even though, of course, it wasn’t misinformation in the first place.
PayPal isn’t a service that many who have paid attention have trusted in a long, long time. Fundamentally however it’s not that PayPal has ‘gone woke’ or something like that, seeking to become disinformation czar. They (1) want terms and conditions which give them broad flexibility to respond to the twitter mob, and (2) more importantly to regulators [which often parrot the same].
Regulators push financial institutions to adhere to their own policy objectives, without legislation or even explicit regulation. They simply deem certain activities to be ‘risky’ or suggest that compliance with those objectives will make life easier or harder for the institution. That manifests itself in whom a lender might approve for a mortgage to where a bank places its branches. Regulators tell companies this is how they protect their reputation which is important for risk. But this has real costs to society.
Just as new merchant codes are a tool for tracking gun purchases, don’t be surprised to see some Red States push for a merchant code to track abortion services. Did you know that financial regulators want to impose climate change policy by considering it a risk to banks?
Already, anti-money laundering rules cost $7 million per conviction and that cost falls on financial intermediaries like banks and PayPal. That manifests itself in costs on accountholders, like minimum balance requirements, that keeps people out of the banking system according to the FDIC (and pushes them into using alternatives like costly check cashing stores).
Financial institutions aren’t actually seeking to fine their customers for ideas that the company objects to. They’re acting to protect their reputation, which is to say they’re acting to appease regulators who hold the key to an institution’s profitability and ability to conduct business.
