PayPal floated a $2,500 fine for misinformation, then pulled it within days

In early October 2022 users noticed that PayPal's updated Acceptable Use Policy, taking effect November 3, would let the company impose a $2,500 fine any time one of its 429 million consumers and merchants expressed what the company deemed misinformation. Outrage followed, including from PayPal's own former president David Marcus, who called the new AUP 'insanity' and wrote that 'a private company now gets to decide to take your money if you say something they disagree with.' Elon Musk, one of the entrepreneurs behind PayPal's founding, publicly agreed.

PayPal backtracked over the weekend of October 8-9, 2022. 'PayPal is not fining people for misinformation and this language was never intended to be inserted in our policy,' a spokesperson told media outlets. 'We're sorry for the confusion this has caused.' Critics did not buy the error explanation - 'PayPal isn't sorry, they're just mad they got caught,' actor Kevin Sorbo posted - and calls to delete PayPal accounts spread among crypto and free-speech users. PayPal shares, already down more than half in 2022 while Visa fell just 15%, were expected to open about 1.5% lower on Monday.

Shares set to open about 1.5% lower on a stock that had already halved in 2022, plus viral calls to delete accounts

A $2,500 forfeiture clause sat in a published policy update for days without internal challenge before users surfaced it.

It landed weeks before US midterm elections, when distrust of platform content moderation decisions was at a peak.

The retraction that the language was 'never intended to be inserted' strained credulity, drawing more scrutiny to the apology than the clause itself.

Terms of service are product: publish a punitive clause you cannot defend and the fine print itself becomes the story.

PayPal removed the language and apologized for 'the confusion.' The episode added to the pressure on a stock that had more than halved in value year to date, underperforming Visa (-15%) and former parent eBay (-43%).