PayPal Revises Acceptable Use Policy Following Legal Advocacy Challenge

PayPal has updated its Acceptable Use Policy to remove the terms “hate” and “intolerance” from its list of prohibited transaction activities. The company announced that its revised policy now restricts bans to discrimination against traits protected under applicable law. Additionally, PayPal narrowed its “misleading information” policy, clarifying that it now applies only to communications regarding specific PayPal transactions rather than general customer speech.

The policy changes follow a formal objection filed with the Federal Deposit Insurance Corporation (FDIC) by the Alliance Defending Freedom (ADF). The legal group argued that PayPal’s previous, broader standards allowed for “politicized debanking,” potentially violating Executive Order 14331, which protects access to financial services for individuals based on their beliefs. The ADF cited past instances where PayPal froze accounts belonging to organizations such as Moms for Liberty and the Free Speech Union.

PayPal outlined these updates in a September letter to the FDIC as part of its application to insure deposits for a new industrial bank in Utah. Following the policy revisions, the ADF withdrew its objection to the company’s banking application, noting its understanding that the new terms protect lawful religious practice and speech.