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Who respects your rights online?

PayPal does not accept substantive content submissions from its users. The service therefore does not raise any important licensing issues. Instead, the key privacy question is when PayPal can disclose your personal information to third parties.

PayPal's Privacy Policy allows your information to be shared with a number of third parties, including contracted service providers, banking partners and credit bureaus. Many of these provisons are necessary in order to properly run the PayPal service, but some exist to improve PayPal's marketing efforts:

• It shares your information with financial institution partners to try to sell you various financial products.
• It shares your personal information with “members of the eBay Inc. corporate family”, which includes eBay and Shopping.com.

Although you can opt out these two provisions, the default is to allow sharing.

As is the case with all of the other companies surveyed, PayPal can also disclose your information to law enforcement in response to a subpoena or if it believes that disclosure is necessary to prevent harm. 

Amendment

PayPal can amend its User Agreement at any time. If the revisions are "substantial" (which means that they reduce your rights or increase your responsibilities), PayPal agrees to provide you with 30 days' notice – although the notice is merely posted on its Policy Updates page, not emailed to you.

Termination

PayPal has complete discretion when it comes to termination:

PayPal, in its sole discretion, reserves the right to terminate this Agreement, access to its website, or access to the PayPal Services for any reason and at any time upon notice to you and payment to you of any unrestricted funds held in custody for you.

PayPal should be able to terminate an account only if the user has breached its User Agreement or Acceptable Use Policy. PayPal also needs to improve transparency with respect to termination. PayPal users have reported having their accounts closed by the company and being told by customer support that the only to find out the reason for the termination is by subpoena.

The User Agreement contains a mandatory arbitration clause. The result is that for any dispute of less than $10,000, you give up your right to sue PayPal in court. The dispute must be resolved by means of binding arbitration, which cannot be conducted in person (it must be done by telephone, online, or based solely on written submissions).

Although such clauses are becoming increasingly common, Netflix and Spotify are the only other companies in the survey that have adopted such a clause. Mandatory arbitration is dangerous because most consumers think that if they have a dispute with a merchant, they will have access to the judicial system and all of its rights and protections, such as bringing a class action, having their case heard by a judge, and the right to appeal. These rights do not exist in arbitration proceedings.