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PayPal to ride out social media backlash over misinformation policy change

PayPal to ride out social media backlash over misinformation policy change

Online payments giant PayPal is unlikely to suffer any significant impact from a customer backlash over a supposed charge for users spreading misinformation, acccording to financial analysts.

The controversy was sparked by statement issued by PayPal Holdings earlier this week which suggested that its users could be fined up to $2,500 for publishing misinformation.

The policy change, which was subsequently shelved, was initially met with dismay by Twitter users who called for a boycott of the company. Searches for 'Delete PayPal' were subsequently trending within hours of the statement. Meanwhile the company's share price fell by 7.9% over the course of Monday and Tuesday.

But fears of a mass exodus of customers or any long-term impact have been dismissed by analysts.

Trevor Wiiliams, senior vice president at broker Jeffries and a fintech/payments equity research specialist, highlighted that despite the social media backlash, only 70,000 users had retweeted or liked statements calling to delete the app. In addition, it is unclear how many of the near 400 million consumer accounts were actually deleted.

“If action taken by consumers in response to the policy update/retraction is isolated to those that voiced displeasure via social media (or even a multiple of those that did), we would not expect there to be any noticeable impact on net new active accounts,” wrote Williams in a report to clients. 

Meanwhile other analysts have continued to back PayPal despite the protests with Bank of America analyst Jason Kupferberg moninating PayPal as his "top pick" in  report to clients.

The market sentiment raises question marks over the effectiveness of social media campaigns and boycotts in terms of imapcting their targets' share price or user base. 

As Williams wrote, the “only lingering risk” for PayPal would be if the controversy “prompts a broader politically motivated boycott, the likelihood of which is impossible to measure".

The backlash was also quietened to some degree by a statement from PayPal that the original message over misinformation charges was itself wrong and apologising for any "confusion". 

Nevertheless, it has been a bruising year for PayPal so far. The payments company has seen its share price halved over the last 10 months as it has fialed to hit any of its post-pandemic grwoth forecasts.

And it may yet face a further backlash from users over its actions in Hong Kongn where one of the last remaining pro-democracy groups has had its account terminated by PayPal. 

The League of Social Democrats revleaed that it was informed via email that the account was terminated because of the "excessive risks involved".

The league's former chairman Avery Ng told VOA news that the group feels "helpless" over the decision. "The political situation and pressure cause corporations to stop providing even basic normal services to opposition parties, further hindering basic fundraising activities," said Ng who was only recently released from a 12 month prision sentence. 

“[We received] no warning. No response from them for further explanation. Only response on how to withdraw the remaining funds from the account. It needs to provide us and the public with a clear answer,” said Ng.

“PayPal is one of our key tools for online fundraising. Their unexpected and unexplained discussion hinders our effort to raise funds for our court cases in an already struggling environment.”


Comments: (2)

A Finextra member
A Finextra member 14 October, 2022, 16:19Be the first to give this comment the thumbs up 0 likes

oh dear, could this be a Ratner moment? (google Ratner gaffe for a chuckle)

It is improbable this is a mistake, looks like a test. Something odd is going on. For example, PayPal closed the account of the Free Speech Union several weeks ago which the article fails to mention.

Weaponising financial services is unwelcome. Makes the case to ban CBDCs which can only worsen this trend.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 17 October, 2022, 13:46Be the first to give this comment the thumbs up 0 likes

LOL if only these protestors had used Reddit WSB, their call to Ban PayPal might have fared better!