The online payment system PayPal has revised discriminatory policies after Alliance Defending Freedom filed a comment to the Federal Deposit Insurance Corp. pointing out its violation of federal law by freezing customer accounts for reasons appearing to be based on the customers’ political alignments. 

The original policy carried out by PayPal blocked transactions it deemed promoted “hate, violence, racial or other forms of intolerance that is discriminatory,” while the updated policy “ties the prohibition to characteristics ‘protected under applicable law’” shared ADF in a press release.

ADF Senior Counsel Caleb Dalton told The Washington Stand the financial technology company has a long history of mixing business and politics. “PayPal has often had their targets turned toward conservative values and kind of use their heft as an organization to target conservatives,” he said. 

In 2022, PayPal froze the accounts of the Free Speech Union and its founder, as well as the accounts of the Moms for Liberty organization the same year. Last year, President Donald Trump issued an executive order “Guaranteeing Fair Banking for all Americans” to combat financials institutions “engaged in unacceptable practices to restrict law-abiding individuals’ and businesses’ access to financial services on the basis of political or religious beliefs or lawful business activities.”

“Executive Order 14331 makes clear that Americans should not be denied financial services because of their constitutionally or statutorily protected beliefs,” ADF stated.

Dalton explained when PayPal went to apply to the FDIC for insurance from the federal government, ADF notified the corporation that PayPal had “a history of not serving the needs and convenience of the entire community but actually using their power to discriminate against conservative viewpoints.”

The senior counsel continued that PayPal also altered their user agreement. Prior to the revision, if the company “determined that any customer was engaging in what they determined to be inaccurate or misleading information, they could completely disband you from their platform without any further qualification,” Dalton said. “They’re updating that again to say only if you’re actually misleading a customer while selling an item is now part of their user agreement. So, it’s going to be limited to the actual transaction issue.”

The online payment system has also updated their “Frequently Asked Questions” webpage “to say discrimination only applies to unlawful discrimination or discrimination that is in violation of applicable law,” Dalton said.

He continued that PayPal had no limitations on what it deemed to be “discriminatory” under the previous rule. “In the past, people who were opposing the mutilation of minors or opposing these types of gender transitions, things like that, could be deemed discriminatory.”

PayPal additionally created a public statement on its FAQ page: “PayPal reviews accounts fairly and consistently, making decisions based on account activity, not a customer’s religion, race, disability, gender, sexual orientation, national origin, political affiliation, or any characteristic protected under applicable law.”

“ADF commends PayPal for taking this step in the right direction and making these significant policy changes to further advance the company’s ‘commitment to fair, consistent, and objective account management,’” Dalton said.

“Its commitments are an important step toward preventing the unfair debanking of its customers, and we’ll be watching to ensure these changes are implemented and applied fairly. PayPal is an industry leader, and we hope others in the financial services and banking sectors will replace subjective terms like ‘hate’ and ‘misinformation’ with clear, objective standards that protect their customers” Jeremy Tedesco, ADF’s senior counsel and senior vice president of the Counter-Censorship Task Force, added in ADF’s press release. 

Dalton encouraged anyone concerned about the issue to contact their state representatives in Congress. “We’d love to see more durable change with proposed federal and state legislation to prohibit politicized debanking. Americans should never fear that their bank or financial services provider is going to cancel them because of their religious beliefs or political views.”