PayPal
PayPal requires mandatory arbitration and waives class action rights for all disputes. They can hold your funds for up to 180 days without specific justification and may update your payment method information without your consent. The agreement allows PayPal to terminate accounts and impose limitations at their sole discretion.
If you pay for something with PayPal and your main payment method doesn't have enough money, they'll now automatically charge your backup payment method for whatever's left instead of just trying once. They've also made it clearer that if you go to court with them, you can't join together with other people in a lawsuit or have a jury decide—it'll be decided by a private arbitrator instead, which gives you fewer chances to appeal or get all the evidence you want. A couple new features got added too: business accounts can now deposit cash at stores and checks through the app, and if you use crypto through PayPal, it's technically a separate account type now.
See the full change →The Bottom Line
AI-generated summary of the terms as we read them. Opinion, not legal advice.
PayPal requires mandatory arbitration and waives class action rights for all disputes. They can hold your funds for up to 180 days without specific justification and may update your payment method information without your consent. The agreement allows PayPal to terminate accounts and impose limitations at their sole discretion.
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Notable Clauses
“Holding the balance in your Balance Account, the balance in your business account, or any money waiting to be claimed through your personal account if you do not have a Balance Account linked to your personal account, for up to 180 days if reasonably needed to protect against the risk of liability o...”
“These terms include an agreement to resolve disputes by arbitration on an individual basis.”
“If we believe that you've engaged in any of these activities, we may take a number of actions to protect PayPal, its customers and others at any time in our sole discretion.”
“Our decision about holds, limitations and reserves may be based on confidential criteria that are essential to our management of risk and the protection of PayPal, our customers and/or service providers.”
“If you receive a payment for selling goods or services that is later refunded or invalidated for any reason, you are responsible for the full amount of the payment sent to you plus any fees (including any applicable chargeback fee or Dispute fee ).”
“The hold may remain in place longer than 180 days according to Court Orders, Regulatory Requirements, or Other Legal Processes .”
“If this information changes, we may update it using information and third-party sources available to us without any action on your part.”
Protect Yourself
ACTIONABLESettings and actions you can take to limit your exposure
Review and Update Linked Payment Methods
Regularly check which cards and bank accounts are linked to prevent unwanted automatic updates
- Log into PayPal and go to Settings
- Click 'Money, banks, and cards'
- Review all linked payment methods
- Remove any cards you no longer want PayPal to update automatically
Set Up Account Activity Notifications
Enable email and SMS alerts for all account changes and transactions
- Go to Settings → Notifications
- Turn on email alerts for 'Account access' and 'Payment activities'
- Enable SMS notifications for login attempts and large transactions
- Set up notifications for policy changes
Monitor and Document All Transactions
Keep detailed records of all PayPal transactions in case of disputes or holds
- Download monthly account statements
- Screenshot important transactions and their details
- Keep shipping confirmations and delivery receipts
- Document any customer communications
Set Low Balance Thresholds
Keep minimal funds in your PayPal account to reduce exposure during holds
- Transfer funds to your bank account regularly
- Set up automatic transfers when balance exceeds a low threshold
- Consider using instant transfer for faster access to funds
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Disclaimer: The clauses shown above are excerpts from publicly available Terms of Service documents. Ratings and severity levels reflect community and AI assessment, not legal advice, factual claims, or determinations about a company's legality or intent. Clauses marked “VERIFIED” have been confirmed as exact quotes from the source document. Clauses marked “AI-extracted” were identified by AI and may contain errors. Always verify against the original TOS.
Get notified when PayPal updates their TOS
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