Paypal Discovers Trust is a Social Currency Hard to Regain When Lost

Posted: October 9, 2022 by datechguy in business
Tags: , ,

One of the reasons why the left is so worried about Elon Musk taking over twitter is that censorship of the customer only works if everyone is going along. If there is no well traveled public platform where the word can break out then you can’t control the message (which is why the left took Trump rallies off of TV).

It’s even worse for a business. If you’re business model involves trust, ie the public trusting you with your money, the people need to know that:

  1. Their money will be available when they want it
  2. You won’t steal it

Apparently Paypal’s new “I’m going to take your money if you say or post something we don’t like” policy tends to violate that basic rule.

The report sparked outrage online, with many people tweeting pledges to dump the online payment facilitator. Particularly chilling was the fact that the policy said determinations of what could be deemed “misinformation,” or a threat to the “wellbeing” of other users was to be at the “sole discretion” of PayPal. The now-aborted policy said users could be liable for “damages” — including the removal of $2,500 “debited directly from your PayPal account” per offense.

And once you get a few high profile people with 3.1 million follower like this:

Or someone like this:

the real comedy is that Twitter attempted to hide this tweet so I could not access via Elon Musk reply

Or to put it another way, even with Paypal claiming this was an “error” and insisting this is not a pending policy if that was YOUR money would you trust it in these people’s hands?

Marcus has 100k followers Musk has 108+ million if only a tiny portion of those people say 1 / 100 of 1% decide they do not trust paypal what do you think happens?

Can you say “Bank Run”?

I suspect Paypal is going though the online equivalent of a bank run and I also suspect it’s not going to stop over a retraction, particularly if there are alternatives to paypal out there that people can use, from Donorbox to Glorifi that do not take your money if they don’t like what you say or think.

Well the bottom line isn’t pretty because Paypal is about to discover the 2nd lesson of dictating how customers should think or else.

It’s much harder to regain lost trust then it was initially to build it.

Closing thought are paypal deposits FDIC insured?

  1. Matt Harris says:

    They aren’t a bank, per their own statements. Pretty sure they are not FDIC insured