ayPal has tried to backtrack on a controversial policy that could have caused users to be fined $2,500 for spreading "misinformation," claiming the policy update was published "in error."
The now-retracted misinformation clause in PayPal's Acceptable Use Policy (AUP) was set to go into effect on November 3, expanding the list of prohibited activities to include "the sending, posting, or publication of any messages, content, or materials" that "promote misinformation."
PayPal has since told multiple media outlets that the updated AUP was distributed in error and contained incorrect information and that it would not fine its users for spreading misinformation:
“PayPal is not fining people for misinformation and this language was never intended to be inserted in our policy [...] Our teams are working to correct our policy pages. We’re sorry for the confusion this has caused.”
The controversy has spread like wildfire on Twitter among both crypto and non-crypto observers, with some still commenting on the issue despite the retraction.
David Marcus, CEO of Lightspark and former PayPal president, called it "insanity" that "a private company now gets to decide to take your money if you say something they disagree with."
Elon Musk, CEO of Tesla and former co-founder of PayPal, replied to Marcus' tweet with "Agreed."
According to Maple Finance co-founder Sid Powell, the case at hand is a textbook example of why it is critical to have custody of your own funds.
Eight Michaal van de Poppe, the founder and CEO of crypto consulting and education platform Eight, called it "the end of PayPal."
However, not everyone thought PayPal's now-retracted clause was disrespectful to its users.
Meltem Demirors, chief strategy officer of digital asset investment firm CoinShares, stated that companies have the right to choose who can use their services without explanation:
2/ "whether explicitly stated via their Terms of Service or not, all sorts of companies from @github to @PayPal to (insert service provider here) engage in censorship and have the right to deny service and access to anyone they choose, at any time, without explanation"
“And if you think crypto is immune you're either naive or willfully ignorant,” she said, adding:
“Currently, 31% of post-merge Ethereum blocks are OFAC-compliant, meaning they censor transactions associated with specific contracts and addresses on a state-sponsored list.”
While imposing a fine would have been a first for PayPal, the payment giant is no stranger to deplatforming users with whom it disagrees politically, having severed ties with domain registrar Epik in October 2020, which provided services to the Proud Boys and other conservative groups.
PayPal, like the broader stock market, has dropped 64.65% in the last year, according to Yahoo Finance.
The Nasdaq is set to reopen on September 10 at 9:30 a.m. EST, so it remains to be seen whether the clause and its subsequent withdrawal will have an impact on PayPal's share price.