PayPal (PYPL) Have trouble.
The financial services platform has suffered a severe decline since the beginning of the year.
Its share price has fallen 52.2% since January. Market value fell by nearly $114 billion during that time to $104.3 billion.
Concerns about profitability around fintech have increased in recent months due to concerns about Depression has taken precedence over all other considerations with investors.
Investors are concerned that the Federal Reserve’s (Fed) aggressive interest rate hikes to tame inflationary40-year high, will lead to a so-called hard landing for the economy.
Usually, when interest rates rise is a good scenario for financial institutions. They make money by charging borrowers more than they pay lenders.
Fine of US$2,500 for false information
The problem is that a sharp drop in economic activity is likely to affect many households. This can lead to an increase in unpaid bills and a pile-up of defaults on loans issued by financial companies.
PayPal’s turnover mainly derived from the fees charged by the company when consumers use the platform to pay for online purchases and various transactions. If transaction volume drops, so does PayPal’s revenue.
In addition, the company is also bearing the brunt of a sharp decline in small investor interest in cryptocurrencies. PayPal was one of the first companies to offer buying and selling services for Bitcoin (BTC) and Ethereum (ETH), the two leading cryptocurrencies by market value.
The crypto craze that peaked in November 2021 has completely collapsed. The sector has been in the doldrums for several months, marked by a sharp drop in trading volume and withdrawals by retail investors, which typically come to market via PayPal and CashApp , Block’s (SQ) communication.
But as if all these challenges weren’t enough, PayPal just created a big problem on its own. Documents have just been leaked in which the company says it will impose financial penalties on customers who violate its policies.
Any false information will be subject to a $2,500 fine. Essentially, if a customer is found guilty of four miscommunication practices, they could be fined $10,000. PayPal will withdraw this amount directly from the customer’s account.
“You are independently responsible for compliance with all applicable laws in all your actions in connection with your use of PayPal services, regardless of the intended use,” the document states. titled “Acceptable Use Policy” says.
“Violation of this Acceptable Use Policy constitutes a breach of the PayPal User Agreement and may subject you to damages, including liquidated damages of US$2,500.00 per violation. the amount may be debited directly from your PayPal account(s), the company added.
You can read the entire document here.
Interestingly it is marked “Last Updated on 3 Nov 2022”. This suggests that the policy was only in effect for less than a month.
Public protest
The document leak has led to a wave of outcry against PayPal on social media. Some of the company’s co-founders, like Elon Musk and David Marcus, are among those who criticize the policy for “going against everything” they “believe”.
“It’s hard for me to publicly criticize a company I used to love and dedicate so much to,” Marcus tweeted on October 8. “But @PayPal’s new AUP goes against everything I believe in. A private company can now decide to take your money if you say something they disagree with. It’s crazy.”
“Agreed,” Musk quipped.
The leak has sparked all sorts of criticism against the tech giants, who claim they are too powerful and intolerant.
“PayPal is giving private social credit,” commented one Twitter user.
“How does Paypal know you’re spreading misinformation? How are they monitoring our social media accounts? I don’t understand,” another user said.
‘Error’
Contacted by TheStreet, PayPal said it was a “bug”.
“AUP [Acceptable Use Policy] A PayPal spokesperson said in a recent emailed statement that the error message included incorrect information and that the language was never included in our policies. Our teams are working to fix our policy pages. “
As a result, PayPal does its own damage control.
“We apologize for the confusion this has caused,” the spokesperson added.
The question is whether it is too late for the company’s reputation to be put at risk of being blacklisted by those who oppose Big Tech. This list includes the Meta . Platform (META) – Facebook, Instagram; Alphabet (GOOGLE) via Youtube and Twitter (TWTR) among others.
