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