PayPal Censorship Is Not Limited to Online Provocateurs

By: Karl-Friedrich Israel

There is a debate among libertarians about the business practices of big tech companies like PayPal, Google, Facebook and Twitter. Is it legitimate for these companies to block user profiles for political, ideological, personal or any other reasons?

The libertarian purist’s answer is: “Yes, these companies can take such action without explanation! It’s their right.” The justification is relatively simple: in a libertarian private law society, no company should be forced to serve customers it does not want to serve. Both the purchase and sale of goods and services are voluntary. Accordingly, from a libertarian point of view, there is nothing to be said against the user profiles of Milo Yiannopoulos, Alex Jones, Rihanna or Clint Eastwood being temporarily or even permanently blocked.

However, the discussion should not end here. Just because someone has the right to do something, you don’t have to approve of it. You can criticize the business practices of companies at a different level, even if they do not violate any rights. This criticism is even of the utmost importance.

Just as Twitter can block an account, Twitter customers can decide to stop using the service if they don’t like the business practices. Public criticism of these companies therefore has two important effects. Firstly, they inform users about how these companies really operate, because hardly anyone actually reads the general terms and conditions. On the other hand, they give companies an indication of what actual and potential customers think of their practices. If a critical mass of people openly disapproves of these practices, the companies will be forced to change their business policy if they want to maintain or increase their market share. This is exactly how a market economy works.

So, it is important to be critical. It draws users’ attention to certain dangers and, in the best-case scenario, can remove the latter if companies react adequately and customer-oriented. And they must, if they want to remain or become top dogs (abstracting from certain crony interventions into the market place).

In the case of the online payment service PayPal, I myself have become the victim of what I consider to be a questionable business practice. After only a few transactions, all of them very small in size, my account was limited so that further payments could neither come in nor go out. Shortly afterwards, the business relationship was terminated unilaterally. An unacceptable risk emanated from my account, and activities were noticed that violated the terms of use. My balance will be withheld for 180 days before I can recover it by submitting identification documents.

The customer service representative on the telephone assured me that PayPal had decided not to work with me anymore. When asked what exactly I was guilty of, he told me that he could not give any information about it. Even after several written inquiries, I didn’t get any information on the case.

On my PayPal account money flowed from three different sources and was held there in Euro and US Dollar. As far as I can remember, I used part of the money to book a hotel room and a train ticket. Then the account was blocked.

From my point of view, it would be important for PayPal to communicate which of the activities exactly violated the terms of use, so that I and other users know how to behave in the future. The whole thing is not a unique case either. The blocking of user accounts is based on automated algorithms that no customer service employee can see through. So, the individual employee doesn’t even know what the problem was and, even if he wanted to, can’t offer a solution.

Those responsible at PayPal should ask themselves whether such business practices are sustainable. In recent years, modern crypto currencies have increased competition, especially for international transactions. If user accounts with PayPal can be blocked just like that, without visible reason and without explanation, one should abstain from using PayPal in particular for business purposes. I can only advise against it.

This example also shows how important it is to prevent a monopolization of the market. This does not mean that companies should be prevented from growing beyond a certain size. If you offer a good product, you should also reap the rewards and grow. Rather, it is a question of ensuring that the up-and-coming competitors, such as crypto companies, who offer alternative products, do not get stones thrown in their way through state interference.

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