Published - October 10, 2022 @ 5:43 PM (EET)

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Paypal Holdings Inc. (NASDAQ:PYPL) walked back on a published policy over the weekend that foresaw fining users $2,500 for spreading misinformation.

Reportedly, the digital payments company updated its acceptable use policy to include a clause that could see customers "be debited directly from your PayPal account" if users were to violate new rules related to prohibited activities.

Following widespread criticism and outrage the company received for its policy change, PayPal said the policy change was in error.

"An AUP notice recently went out in error that included incorrect information.  PayPal is not fining people for misinformation, and this language was never intended to be inserted into our policy.  Our teams are working to correct our policy pages.  We're sorry for the confusion this has caused", said a spokesperson for PayPal.

High-profile individuals, including its former president, David Marcus, took to Twitter, saying the new policy was "insanity" that forced him to come forward and openly criticize a company he "used to love and gave so much to."

Responding to Marcus' tweet, Tesla (NASDAQ:TSLA) CEO and one of the entrepreneurs behind the founding of PayPal, Elon Musk, said he "agreed."

WHY IT MATTERS

Heading into midterm US elections next month, which could see the Republicans retake control over both houses of Congress, tensions are running high over misinformation claims.

PayPal quickly backtracked since many on the 'right' fear that Big Tech is targeting them due to their political views, but critics didn't seem to buy the company's claims it was all just an innocent "error."

"PayPal freezing funds for thought crimes is despicable," wrote the former head of growth marketing for crypto exchange Kraken, Dan Held.

In premarket trading Monday, PayPal stock dipped 3.5% at $87.03, adding to its more than 65% slump over the past year.