Will PayPal fine you $2500 for trading artistic nudes?

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PUBLIC DEFENDER By Brian Livingston PayPal, the giant online payment-processing service based in San Jose, California, put itself in hot water last mo
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Interstate90, SueW, DLivesInTexas, lmacri

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Last I heard, PayPal quietly put the $2500 for misinformation policy back in place a week or so after they made a show of reversing it.

The most troubling thing about this is PayPal gets to decide what is and isn’t “misinformation.”  Many have closed their PayPal accounts over this.

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rc primak

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I wonder what the legal position of PayPal is – is it a bank? If so, then I guess it should obey the rules for any other bank. Not sure what the differences are between US banks and EU banks, but within the law, as a EU citizen, it’s not up to the bank to define what I can and cannot buy.

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As far as I know, PayPal is not legally a bank. They are more of a FinTech App, as described in a previous Public Defender article by Brian Livingston. As such, they do not have a physical presence anywhere, and are not regulated the same way a bank would be regulated in any jurisdiction. If I’m wrong about this status, I’m sure someone will step in and correct me.

Due to my belief that PayPal is not regulated the way banks are, I am very hesitant to use their services. But sometimes they are the most convenient or even the only practical way to pay certain merchants and organizations with web site payment pages. So I keep only a very small amount of money in my PayPal Account.

But I presently do have the account linked to my real bank checking account. I may have to sever that link in light of this article. I don’t want PayPal to be able to draw without my consent, any money from my actual checking account. Certainly not US$2500!

All of this said, PayPal (and any financial institution) does have the legal right to ban illegal or risky activities from its account holders.  And to refuse or close accounts of persons suspected of doing illegal things using accounts with these institutions.

Where PayPal’s policies become problematic is when they try to restrict legal activities. Like political donations or fundraising, adult content and its commerce, and “risky” payments just because a local government might retaliate against PayPal for hosting accounts of dissident groups.

It’s one thing to refuse well-defined illegal  or risky financial activity. Quite another to use vague and overly-broad language to arbitrarily confiscate funds belonging to law-abiding individuals or companies. No regulated bank or brokerage would get away with practices as poorly-defined as those of PayPal. And if they did anything like this, there is an arbitration process to resolve disputes. PayPal does not have an arbitration policy that I know of.

But they can be sued.

-- rc primak

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Simon_Weel

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I have always been wary of using Paypal for a variety of reasons – some minor and some less so. After reading the examples at the top of this article, it makes me more determined only to use Paypal when I absolutely have to (ie. using eBay, which I very rarely do).

They clearly are not a bank (and were not listed as such by the  Bank of England in Oct 2021) so we should not regard any money held by them as being protected by banking regulation or good practice. Caveat emptor!

Chris
Win 10 Pro x64 Group A

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rc primak

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Most people use paypal for pay-as-you-go. Either a card is linked, or a bank. Could they still fine us, even though there is no money in the account?

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rc primak

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Do you only pay on paypal or do you sell a product?  There is a vast difference between the two.

Susan Bradley Patch Lady

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I only pay on paypal.

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The people most impacted by this are sellers.  If you are like me in your personal paypal you don’t keep much in the way of funds.  As a seller I do. They can’t authorize a payment until a transaction occurred which would take notification and actions and first and foremost a notice to you that you’ve done something against their policies.

Susan Bradley Patch Lady

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rc primak

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Oh, they can still fine you. The question becomes will you pay? By linking only to a credit card, no bank account, you can dispute the transaction with the credit card company. Otherwise, don’t link any account to PayPal. You can never be forced to pay the fine as PayPal is not an entity that can impose legal fines. Only courts can assess fines. Tell PayPal to put any “fines” where the sun never shines.

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rc primak, Interstate90

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Just what I thought — they can deduct money from the linked bank or card.

The trouble is that even when a card is deleted or expired they still have that information. It is well known that even expired cards can mysteriously still work.

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Expired cards don’t work.  Trust me I have experience and know the facts.

Susan Bradley Patch Lady

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ibe98765

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Tell PayPal to put any “fines” where the sun never shines.

But then you would lose all access to PayPal. For some of us that would be a difficult pill to swallow. But one well worth the $$ Savings $$ .

-- rc primak

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If you receive money on PayPal and want to retrieve it, it is easiest to do that via a transfer to a linked bank account.  Otherwise, you have to wait for them to send you a check and I believe there may be some extra fees involved in doing this.

I don’t think that PayPal can legally reach into your bank account and take money w/o your authorization.

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