PayPal Says It Won't Fine Users $2,500 for Misinformation, but It Will Fine Them for 'Intolerance'

"Sounds like a good reason to think twice about using PayPal," writes Eugene Volokh.

PayPal is a company that facilitates financial transactions. Peter Thiel and Elon Musk, billionaire entrepreneurs who have both talked about the importance of free speech and civil liberties, have been involved in the company at various stages.

Last week, PayPal rolled out an updated user agreement.

That agreement prohibits "the sending, posting, or publication of any messages, content, or materials" that "present a risk to user safety or wellbeing" or contain "misinformation." The policy notes that what counts as misinformation is at PayPal's "sole discretion." Violate the policy, and PayPal can deduct $2,500 from the offending user's account.

That's $2,500 per infraction. Someone who spreads quite a bit of so-called misinformation could stand to lose a great deal of money.

PayPal has now backtracked.

"An AUP notice recently went out in error that included incorrect information," a PayPal spokesperson said. "PayPal is not fining people for misinformation and this language was never intended to be inserted in our policy."

That's a welcome clarification, because the policy as written was deeply misguided.

Efforts to police misinformation are prone to significant error and overreach. Governments, media organizations, and tech platforms have all made serious attempts to limit the spread of misinformation by cracking down on speech they thought was wrong or dangerous—but time and time again, these measures have resulted in censorship of legitimate discourse.

Facebook, for instance, took great pains to prevent users from theorizing that COVID-19 emerged from a lab. Twitter faced pressure from the Biden administration to purge accounts that criticized the mainstream consensus on vaccines, masks, and other subjects. YouTube's policies prohibited content creators from spreading so-called COVID-19 misinformation, including statements like "masks don't work" or "COVID-19 is no more dangerous than the flu." Some of those statements have more validity than others, but they're no longer considered outside the bounds of acceptable conversation. What the gatekeepers termed "misinformation" is now just information.

The government's so-called misinformation experts have performed no better than media organizations or social media platforms. Remember Nina Jankowicz, who was chosen as director of the Department of Homeland Security's Disinformation Governance Board? Though she had wrongly flagged the New York Post Hunter Biden laptop story as fake Russian nefariousness, the department picked her to advise elite law enforcement and national intelligence on misinformation trends.

It would be completely reasonable for PayPal users to fear that misguided misinformation policing might end up costing them money, and the company is well-advised to reverse course.

This incident inspired Eugene Volokh, a professor of law at UCLA and writer for The Volokh Conspiracy, to take a closer look at the policies PayPal already has in place. What he found alarmed him: PayPal prohibits "activities that…relate to…the promotion of hate, violence, racial or other forms of intolerance that is discriminatory or the financial exploitation of a crime."

Violating that policy can also result in a $2,500 fine. Volokh warns that sharply criticizing a religion or government officials could be construed as the promotion of hate—and could theoretically violate that policy.

"Sounds like a good reason to think twice about using PayPal," he writes. "I've just withdrawn the $1000+ I have in my PayPal account, and I'm starting the process of disentangling myself from the service to the extent possible."

PayPal is free to put in place whatever policies it thinks are best, but the company shouldn't be surprised if people don't trust it to correctly define terms like misinformation, hate, or intolerance—and, thus, take their business elsewhere.