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Andy Nguyen
By Andy Nguyen November 2, 2022

No, PayPal isn’t fining users $2,500 for spreading misinformation

If Your Time is short

  • PayPal does not levy fines for spreading misinformation. The company prohibits providing "false, inaccurate or misleading information" in connection with use of its websites, PayPal accounts and PayPal services.
  • If fines are levied, they are connected to activities such as fraud, counterfeiting or other illegal activity.
  • The policy is not new or reinstated. The provision is in each version of the company’s User Agreement going back to at least 2013
  • In early October, PayPal said it mistakenly uploaded a document to its website that incorrectly said users would be fined $2,500 if they spread misinformation on the platform. The company retracted the document. PayPal’s current documents about the acceptable use of the platform do not have any provisions regarding misinformation.

Has PayPal secretly resurrected a policy that the company said in October it erroneously released — and then corrected? 

No. But facts didn’t stand in the way of this viral Instagram post: "BREAKING: PayPal has reinstated its policy to fine users $2,500 directly from their accounts if they spread ‘misinformation,’" an image shared Oct. 27 said. 

The post showed a screenshot of an Oct. 27 headline from The Gateway Pundit, a conservative news site. "Canceling my account!" the post’s caption said.

The Instagram post was flagged as part of Facebook’s efforts to combat false news and misinformation on its News Feed. (Read more about our partnership with Meta, which owns Facebook and Instagram.)

The Oct. 27 article in The Gateway Pundit claimed PayPal has updated its User Agreement to fine users $2,500 if they provide "false, inaccurate or misleading information." 

But that’s not how it works. The only time PayPal institutes fines is when users have violated PayPay’s Acceptable Use Policy, which outlines specific prohibited activities. The list of prohibited activities does not include spreading misinformation. 

And when fines are levied, they are not for violations per se, but for damages related to "investigatory costs when sellers engage in activities that violate the (Acceptable Use Policy), like fraud, counterfeiting or other illegal activity," according to PayPal.

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The Gateway Pundit article appeared to conflate PayPal’s Acceptable Use Policy with its User Agreement, which are separate documents. 

The User Agreement does warn sellers not to "provide false, inaccurate or misleading information" under its restricted activities section. But that is included in a list of activities prohibited in connection with "use of our websites, your PayPal account, the PayPal services," and it’s listed alongside other prohibited activities such as selling counterfeit goods and sending or receiving fraudulent funds.

If fines are levied, it’s for "administrative costs incurred by PayPal to monitor and track violations, damage to PayPal’s brand and reputation and penalties imposed upon PayPal by its business partners" as a result of a seller engaging in illegal or fraudulent activity, according to PayPal.

Also, it’s not a new or reinstated policy. A PayPal spokesperson told PolitiFact that has been a longstanding provision in its User Agreement for several years. The provision is in each version of the agreement going back to at least 2013

The confusion began in early October, when PayPal said it mistakenly published changes to its Acceptable Use Policy that it later described as inaccurate. The changes said that misinformation was a prohibited activity on the site and users would be fined $2,500 for violations. 

"PayPal is not fining people for misinformation and this language was never intended to be inserted in our policy," the company said in an Oct. 8 statement sent to news outlets.

We rate the claim that PayPal has "reinstated its policy to fine users $2,500" for "spreading misinformation" False.

Our Sources

Instagram post (archive), Oct. 27, 2022

The Gateway Pundit, "BREAKING: PayPal has reinstated its policy to fine users $2,500 directly from their accounts if they spread ‘misinformation’" (archive), Oct. 27, 2022

David Marcus, Twitter post (archive), Oct. 8, 2022

Elon Musk, Twitter post (archive), Oct. 8, 2022

PayPal, Acceptable Use Policy (archive), Oct. 29, 2022

PayPal, User Agreement (archive), Oct. 29, 2022

USA Today, "PayPal controversy: App backtracks on new policy to fine $2,500 for misinformation," Oct. 13, 2022

Email with Caitlin Girouard, PayPal, Oct. 31, 2022

Browse the Truth-O-Meter

More by Andy Nguyen

No, PayPal isn’t fining users $2,500 for spreading misinformation

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