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EricN Publications by Eric Niewoehner
EricNPublications by Eric Niewoehner

Can PayPal Be Trusted?

October 27, 2022

 

How can you trust a business that arbitrarily, without explanation, suspends your service?

The Problem

 

PayPal is once again in the news for all the wrong reasons. On September 19, 2022, PayPal updated their User Agreement, introducing a draconian penalty that could be applied for propagating “disinformation.” Any customer who is deemed by PayPal to be disseminating misinformation can be fined $2500! I thought it was a joke, a hack. But it wasn’t. PayPal quickly withdrew the revision on October 8 once the news went viral, attributing the update as an “error.”

 

I located such a clause in the User Agreement released on September 19, with the following statement buried in a 60 page document:

 

If you are a seller and receive funds for transactions that violate the Acceptable Use Policy [AUP], then in addition to being subject to the above actions you will be liable to PayPal for the amount of PayPal’s damages caused by your violation of the Acceptable Use Policy. You acknowledge and agree that $2,500.00 U.S. dollars per violation of the Acceptable Use Policy is presently a reasonable minimum estimate of PayPal’s actual damages ...1

 

Embedded in the AUP was this ambiguous phrase:

 

Provide false, inaccurate or misleading information;”

 

It is alleged at the time of this writing that PayPal may be experiencing a run on its funds from customers who have positive balances. I saw this posting in Parler that discussed the matter and its affect on the business. MSN posted former PayPal CEO David Marcus’ comment on Twitter:

The event has traveled through social media like wildfire. Alison Morrow interviewed one person who has studied Big Tech censorship at length (Jeffrey Tucker) and a journalist who has had her PayPal account suspended (Radix Verum). The bottom line is quite clear – PayPal is not a trusted platform. And it will hurt the company, possibly beyond repair. Lurking on the fringe of the financial services marketplace are evolving technologies that are prime to take PayPal’s place.

 

A History of Arbitrary Activity

 

What follows is what I wrote and never published back in May 2022. Alas, got a bit sidetracked.

 

I retired in late 2020 and began a new career as a writer. Along this journey I have written several articles on the arbitrary and rather monopolistic practices of Big Tech firms that have disrupted, if not destroyed, businesses (see list below). Occasionally coming up on the radar has been PayPal.

 

I imagine most of you out there use PayPal for some of the same reasons I do. I first started using PayPal because my daughters were attending college and they found obtaining credit cards difficult if not a little bit scary. PayPal was straightforward, no questions asked and easy to use. The girls would often pay me back for various college expenses that I paid up front so they could get through the registration process. A few weeks later the bills and the student loans were finalized and they reimbursed me. What occurred over time was that I rarely drew out the money, so I used it to cover charity contributions. I have found PayPal an easy tool for integrating a payment system into websites. A non-profit wanted to hold an event. Using Constant Contact, we developed an e-mail database, a newsletter, then the registration form and the cherry on top – PayPal. Voila, we were in business. So it was no surprise that over the past few years I have observed thousands of websites that use PayPal as one of their ways to process payments.

 

Yet it has been alarming to read how PayPal arbitrarily suspends accounts without explanation. I first heard of it when they suspended Laura Loomer’s account. Anyone who follows right-wing politics knows something about Laura. She is a bit on the weird spectrum. She must have said something that offended somebody somewhere who contacted PayPal and complained. Next thing she knew, she was adrift with no other means to collect contributions for her Congressional campaign. That’s right folks – PayPal interfered in a political contest.

 

Other cases ….

 

Yet what is most peculiar recently is the strange occurrence of the same medicine being doled out to left-leaning independent journalists. An article posted in Zero Hedge reported how two independent journalism websites had their accounts suspended: Consortium News and Mint News. Consortium actually had their funds seized, about $9700! Like everyone else, there was no clear explanation other than the ubiquitous “user agreement” violation. No one at PayPal answered phone calls. Probably because of the rapid-fire propagation of this report, PayPal released the money and eventually allowed Consortium back on board.

 

Like a bug drawn to the light, I just had to see what these news outlets were spouting that would warrant such punishment. What I read was nothing new. Nobody was inciting violence. Their reports were definitely non-mainstream, but it was obvious they had done their homework. These were well-written reports. I might not share their disposition, but I saw nothing to warrant the credit equivalent of the death penalty.

 

What all these events demonstrate is one of the main problems with Big Tech platforms: trust. How can you trust a business that arbitrarily, without explanation, suspends your service. Rather than pick on Facebook or PayPal, let’s go down to the local lawn and garden. You walk in. The woman recognizes you because you have walked in each of the twelve years before. Yet she is not smiling, but with a concerned face says you cannot shop there anymore. “Why?”, I ask. Her response is that I wrote something on my website that offended one of the owners. She adds, “I am sorry to say this, but we don’t do business with people like you.”

 

“What did I write? What did I say that was offensive?”

 

“I don’t know the details,” she replies.

 

Now this example may seem a bit ludicrous, but the mechanics is no different from what PayPal does. Somebody is offended by something, complains to the manager, and you are punished with no explanation. Having the local landscaper kick you off the premises may seem highly unlikely. Yet what is the difference between my right to buy a petunia, and my right to process the payment through PayPal?

 

I worked in the tourism business last summer. What if I decided that anyone wearing a MAGA cap or T-shirt was not going to be served? They come up to the counter laden with artwork and books, two bars of soap and a stuffed moose. I look at them and tell them outright, “Sorry, but we don’t sell products to people with your viewpoints.”

 

Sounds crazy. So what’s the difference when PayPal does it?

 

This is one clear fact: PayPal suspends accounts without due process and without any connection to the rule of law.

 

To expand on this point you need only look at the recurring lawsuits against PayPal. The one that really got my attention was one where PayPal seized $176,000 in funds. What the gentleman may have been doing with his business may seem marginal, it was not against the law according to the report. It begins to appear that PayPal is looking more and more like a Michigan property tax collector (see John Stossel).

 

So it circles around where we started. The issue of trust.

 

As a business person, you need to ask yourself the question – are you solely dependent on PayPal to conduct on-line business? If so, I would advise you go shopping. Look for alternatives. As the examples explain above, this is not a matter of being a right wing nut. A lot of folks across the spectrum are being penalized for unknown reasons, and it seriously disrupts their business. In essence, the so-called “user agreement” model is systemically flawed if the end result is a lack of trust in the service.

Even as I write this essay, it is interesting how news was released that a credit card processing firm, called Coign, has emerged that is decidedly right-wing in its focus. While it may eventually evolve to being more of a libertarian disposition, it’s primary mission is to provide an alternative to PayPal and any other credit card company (BOA and American Express have also had a history of sudden suspension of accounts based on political views).

 

In Conclusion

 

Back to the present, I must inject what the future will hold for financial services like PayPal. First, lurking in the background is none other than Peter Thiel, one of the original founders of PayPal. Thiel is one of the primary investors behind CFVI and its recent spin-off, Rumble. While financial services is not yet evident in the long term outlook of either company, something tells me it would not be a major leap for Thiel to find some way to see a competitor emerge. He may be tied up by anti-competition agreements, but that may not apply to companies that are, for all practical purposes,

independent such as Rumble. Locals, a derivative operation tied to Rumble, already uses Stripe. Gab has developed GabPay.

 

Conceptually, what PayPal has done coupled with the suspension of bank accounts and payment services by the Canadian government is the very definition of Fascism (with a capital “F”). Fascism's major innovation was to coop major businesses to advance the objectives of the State. We may forget, but there was an attempt by the Biden administration to establish a bureau of information, complete with a singing director. Fox Business stipulated in its recent report that PayPal is essentially doing what the aborted bureau of information project was hoping to achieve.

 

The coverage of the $2500 fine is also fascinating to observe. Using Duck-Duck-Go, typing in “PayPal Misinformation” in the search query, limiting the results for the past week, only two major news outlets appeared in the results. MSN through a Gizmodo article, and well down the list CNBC. Yahoo News, Bloomberg, Fortune, Marketwatch and Reuters appeared down the list. Nowhere to be found was ABC, NBC, CBS, PBS, CNN, The New York Times or The Washington Post. That, in a nutshell, demonstrates how the flow of information in our society is segmented, creating a tribal perspective on serious issues faced by our society today. A review of YouTube produced similar results, with CNBC appearing, but virtually ceding the field to independent news services and Fox News. When you see the spread of information in this manner, it is no wonder that so-called “conspiracy theories” abound reflecting my suspicions in the previous paragraph.

 

In Conclusion

 

As noted previously, the one thing you can control is how much business you want to channel through PayPal. I would recommend you at least hedge your options by providing multiple payment methods for your business. Secondly, I have determined to make it a habit to save User Agreement updates. This is usually pretty easy to do. PayPal notifies customers whenever these agreements are updated. Click the link and save the PDF file to your computer or phone. These documents are outrageously long and complicated, but if you hear of anything odd about these agreements, you can search for key phrases. You can search for the same phrases in other User Agreements to be sure that you are not at risk with other service providers. In a similar vein, treat other documents the same way. You will find restrictions placed under “Acceptable Use Policies” or “Community Standards.”

 

The most efficient way to assess your risk is to simply keep an eye on the news, especially the independent news sources. If you are seeing a service provider appearing on a frequent basis, it should be a red flag.

 

Resources

 

PayPal's IndyMedia Wipeout,” TK News, by Matt Taibbi, May 3, 2022

 

PayPal Cancels CN Account; May Seize Balance,” Consortium News, by Joe Lauria, May 1, 2022

 

PayPal Has Begun Quietly Shuttering Left-Wing Media Accounts,” Jacobin News, by Branko Marcetic, May 3, 2022

 

Paypal Unlawfully Seizes Account Funds, Class Action Says,” Top Class Action, by Anne Bucher, January 18, 2022

 

Credit card for conservatives pushes back against 'woke' capitalism with every swipe,” Fox News, by Amy Nelson, May 5, 2022

 

New PayPal rule: The company can take $2,500 from your account for sharing misinformation (UPDATE),” MSN, by Andy Meek, October 8, 2022

 

 

Other Related Articles

from EricN Publications

 

Are You Ready to Rumble

 

The Gift of Gab

 

What’s Up with Parler?

 

Can GoDaddy be Truster?

 

Disaster Recovery – The Case of Parler

By Eric Niewoehner

© Copyright 2022 to Eric Niewoehner

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