What the Hell Happened to PayPal?

One by one, they go to start their business day only to find a baffling message from their payments app informing them: “You can no longer do business with PayPal.”

There is little or no explanation. They have somehow offended the sensibilities of someone somewhere deep inside the bureaucracy.

They are simply told via an email from PayPal’s Risk and Compliance Department that, after an internal review, “we decided to permanently limit your account as there was a change in your business model or your business model was considered risky.”

In case there is any doubt, the email adds: “You’ll not be able to conduct any further business using PayPal.”

Then, toward the bottom: “If you have funds in your PayPal balance, we’ll hold it for up to 180 days. After that period, we’ll email you with information on how to access your funds.”

If you’re one of the lucky ones and your account has just been suspended, you can go to customer service, explain your situation and hope that someone gets back to you. If you’ve been banned, you’ll need an attorney to file a subpoena for the internal PayPal documents—simply to learn why you’ve been banned. (Good luck getting unbanned.)

These are entrepreneurs, writers, academics, activists—the very same people PayPal, whose mission is “democratizing financial services,” was meant to empower.

PayPal won’t say how many of them it has suspended or banned. In June 2021, the Electronic Frontier Foundation and other civil-liberties groups wrote a letter to PayPal and Venmo, calling on them to open up. So far, they have not, said Aaron Terr, director of public advocacy at the Foundation for Individual Rights and Expression.

The people who founded PayPal—the so-called PayPal Mafia—include Peter Thiel, Elon Musk, David Sacks and Max Levchin. All are champions of free speech. All have expressed shock and dismay at what is happening to the company they created. Several founders agreed to talk with The Free Press for this article.

“If the online forms of your money are frozen, that’s like destroying people economically, limiting their ability to exercise their political voice,” Thiel told me. “There’s something about destroying people economically that seems like a far more totalitarian thing.”

When they launched PayPal, in December 1998, the founders imagined themselves connecting people to the global economy by sidestepping the hefty fees charged by credit-card companies and the inflationary policies of poorly run governments. Early PayPal users had Palm Pilots, and they would beam money from their devices to anyone with an email address. It was especially popular among eBay users.

“PayPal will give citizens worldwide more direct control over their currencies than they ever had before,” Thiel said at a company meeting, in late 1999. “It will be nearly impossible for corrupt governments to steal wealth from their people through their old means, because if they try the people will switch to dollars or pounds or yen, in effect, dumping the worthless local currency for something more secure.”

Since those early heady days, PayPal has amassed 429 million active accounts. Fifty-eight percent of Americans use PayPal, and in 2021, there were 19.3 billion PayPal transactions. It now has a market valuation of $84 billion.

But the company that was meant to liberate countless individuals is becoming something else.

Increasingly, it is becoming a police officer. It is deciding what is right and wrong, who gets to be heard, who is silenced. It is locking out of the financial system those people or brands that have slipped outside the parameters of acceptable discourse, those who threaten the consensus of the gatekeepers. The consensus is hard to articulate; it is an ideology lacking clearly defined ideological contours. But the tenets of that consensus are unmistakable: the new progressive politics around race and gender are a force for good, the Covid lockdown was just, the war in Ukraine is noble, and an unfettered exchange of ideas and opinions is an unacceptable threat to all of the above.

One of the people who apparently posed an unacceptable threat was Eric Finman.

On July 18, 2021, Finman, 24, a Bitcoin investor and entrepreneur, woke up to learn that PayPal had declared war on the startup he’d launched four days before.

The idea of Finman’s startup, Freedom Phone—basically a rejiggered Android with an American flag on it—was to give individuals access to whatever app they wanted.

Apple’s App Store frequently bans apps—like Metadata+, which notifies users every time the United States conducts a drone strike in Pakistan, Yemen and Somalia. By contrast, Freedom Phone’s app store lets anyone download anything. That includes Parler, the far-right social-media platform the App Store temporarily suspended, and Twitter, which the App Store recently threatened to kick out.

Apparently, that didn’t sit right with PayPal, which banned Freedom Phone permanently from the app. (This came days after Shopify and Amazon Pay did the same.) “I just felt my stomach completely and utterly *drop*,” Finman messaged me.

To add insult to injury, PayPal held up $1.2 million in payments to Finman’s company. Eventually, Finman got his money, but the delay, he said, “killed all the momentum.”

Or consider Colin Wright.

The evolutionary biologist received his Ph.D. from U.C. Santa Barbara in 2018 and writes critically about gender ideology.

In June, he was kicked off PayPal—and, soon after, Etsy, where he sold t-shirts and mugs promoting his newsletter. PayPal told Wright that, if he wanted to know why he’d been ejected, “an attorney or law enforcement officer must submit a legal subpoena.”

“A lot of activists have tried to cancel me, and that’s just because I talk a lot about the sex and gender debate,” Wright told me. Since these activists, Wright said, ”don’t really have a good response, they just try to make it so that everyone who has good arguments isn’t able to make a living by talking about it.”

Then there’s British journalist Toby Young.

Young is the founder of the Free Speech Union, an advocacy group, and the editor-in-chief of the Daily Skeptic, which has questioned the efficacy of Covid vaccines.

On September 15, 2022, PayPal informed Young that his personal account had been suspended. A few minutes later, he learned the Daily Skeptic’s account had also been shut down. A few minutes after that, he learned the Free Speech Union’s account was defunct.

In under a half-hour, he’d been cut off from the financial-services world.

“I was appalled when I discovered PayPal had suspended my accounts,” Young told me. “The authoritarian, social-credit system developed in China was now being implemented in the West, except instead of ideological compliance being enforced by the Chinese Communist Party, it was being policed by a woke capitalist corporation.”

Other recently suspended PayPal accounts include Gays Against Groomers, which opposes “the sexualization, indoctrination and medicalization” of children; and UsForThem, and Law or Fiction—both U.K.-based groups that opposed the British government’s response to Covid, including school closures and mandatory masking. PayPal has also suspended the accounts of the anti-establishment site ConsortiumNews, which has criticized U.S. involvement in the Ukraine war; and several alt-right and Stop the Steal activists.

Nor do you just bounce back from being shut out. Wright said it takes years to build a core audience—the people who click on the recurring-payment box on your PayPal account. “When PayPal cancels that, it’s not like I can just bring those 200 people to another payment processor,” he messaged me. “Those are cut off permanently. Maybe I can send them all an email and ask people to sign up elsewhere, but there’s gonna be a major, major major drop off because people have to whip out their credit cards again on a whole new system.”

Nobody outside PayPal really knows how this process works. There is no clear cause and effect. The likeliest scenario involves a user posting something deemed problematic on a social-media platform, and an activist or PayPal employee flagging this, and then, without warning, PayPal shutting down the account.

When I asked a PayPal spokesperson about the company’s suspension policy, she emailed me: “PayPal has and will continue to enable free speech and expression, while appropriately protecting our customers and platform from fraud, counterfeiting and other illicit activities.”

To make sure none of the haters fall through the cracks, PayPal has teamed up with the Anti-Defamation League (ADL) and Southern Poverty Law Center—which has labeled as “extreme” the Family Research Council, a conservative activist group; Charles Murray, a political scientist best known for co-authoring the controversial 1994 book The Bell Curve; and Ayaan Hirsi Ali, a Somali-born critic of Islam and supporter of women’s rights, among many others.

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