Scott, Tillis, and Colleagues Send Letter Seeking Answers on Changed PayPal Policy to Financially Punish Customers Over ‘Misinformation’

WASHINGTON – U.S. Senator Tim Scott (R-S.C.) joined Senator Thom Tillis (R-N.C.) and five of their Senate Republican colleagues in penning a letter to PayPal seeking answers over PayPal’s recent announcement of a policy intended to financially punish its own customers for expressing views which PayPal arbitrarily classifies as “misinformation.” Though PayPal ultimately rescinded the policy before it could go into effect, the senators “remain concerned about the processes and values in place at PayPal that allowed a policy such as this to move forward in the first place.”

The senators wrote, “As widely reported, PayPal issued an update to the terms and conditions of its AUP, which is scheduled to take effect on November 3, 2022. This update included language that would have allowed PayPal to fine any one of its 429 million users up to $2,500 per offense for spreading ‘misinformation.’ Disturbingly, the drafting of the policy gave PayPal ‘sole discretion’ regarding what constitutes ‘misinformation.’ In effect, PayPal sought the ability to define, then punish its users’ public thoughts.”

The senators continued, “Additionally, PayPal attempted to downplay the dramatic shift in policy this provision envisioned by arguing that its user agreement ‘has long-stated that PayPal can take funds of up to $2,500 or local equivalent from an account for each violation of the Acceptable Use Policy.’ Yet a review of PayPal’s current Prohibited Activities list shows the vast majority of violations arise from breaches of public law or transactions for specific disfavored items or business practices. The addition of a vague prohibition on spreading ‘misinformation’ not only would have concerningly expanded the scope of punishable actions, but also would have decreased clarity and increased subjectivity within the Prohibited Activities list. PayPal users deserve clear rules of the road for using the platform, not punishments for open-ended, subjective offenses.”

“Greater encroachment by large technology and financial companies into public speech will only exacerbate Americans’ increasing mistrust of such institutions. Moreover, countless major news events over the past several years have taught us that public information continually evolves, often causing individuals, groups, and organizations to reassess what once appeared to be settled fact. Given this reality, policies that empower companies to punish individuals’ beliefs by acting as arbiters of fact in our ever-changing news and public debate environment represent poor business decisions. Instead, large technology and financial institutions should focus on serving the needs of their customers without bias,” the senators concluded.

Senators Scott and Tillis were joined by U.S. Senators Pat Toomey (R-Pa.), Bill Hagerty (R-Tenn.), Cynthia Lummis (R-Wyo.), Kevin Cramer (R-N.D.) and Steve Daines (R-Mont.).

Read the full letter here.

Background

Sen. Scott has been leading the fight against discrimination in financial services. Last week, he sent a letter to PayPal President and CEO Dan Schulman expressing his concerns regarding reported updates to the company’s Acceptable Use Policy. The letter cautioned the firm against attempting to usurp the democratic process by using its market power as a financial institution to pick political winners and losers.

Read Senator Scott’s letter here.

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