By yourNEWS Media Newsroom
WASHINGTON — PayPal has introduced new protections against politically motivated account restrictions as the digital payments company seeks federal approval to establish its own bank, following years of controversy over the suspension and termination of accounts associated with political organizations, independent news outlets and advocacy groups. The revisions took effect Nov. 4 and prompted Alliance Defending Freedom (ADF), a conservative legal organization, to withdraw its opposition to PayPal’s application for federal deposit insurance.
The changes follow questions about whether PayPal’s previous account enforcement practices were consistent with its stated commitment to treating customers fairly. According to a Nov. 6 investigative report by Greg Piper of Just the News, the company’s explanation of its revised policies appears inconsistent with several past account closures involving organizations across the political spectrum. PayPal maintains that its account decisions have been based on legitimate financial, regulatory and contractual considerations rather than customers’ political or religious views.
PayPal is seeking approval for PayPal Bank, a proposed Utah-chartered industrial loan company that would require approval from federal banking regulators, including the Federal Deposit Insurance Corporation. The FDIC accepted the company’s application June 9, but the application remained pending as of Friday. The proposed institution would expand PayPal’s role in financial services beyond its established digital payments business, making its customer account policies particularly relevant to regulators evaluating its application.
In a Sept. 15 letter to the FDIC, PayPal Bank President Mara McNeill outlined additional changes intended to establish objective standards for account restrictions. The correspondence, which updated an earlier March 16 submission, described a continuing effort to align account decisions with applicable laws, contractual obligations and financial risk considerations.
“These criteria help PayPal ensure that it 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,” McNeill wrote.
Among the most significant revisions was the removal of language restricting transactions involving the promotion of hate, violence or discriminatory intolerance. The replacement provision specifically addresses activities involving violence or unlawful discrimination against legally protected groups. ADF welcomed the more precise language, arguing that the previous policy relied on subjective terminology that could be applied inconsistently.
PayPal also narrowed a provision prohibiting users from providing false, inaccurate or misleading information. The revised agreement specifies that the restriction concerns matters directly related to payment services, including customer identities, account information, business operations, goods and services, and transaction details.
McNeill told regulators the revision would “make clear what has always been the case – that this restriction is limited to conduct in the payments relationship.” However, Just the News questioned that characterization, citing previous enforcement actions against customers whose public statements or political activities had reportedly contributed to account suspensions.
Among the disputed cases were PayPal’s 2022 restrictions against the United Kingdom’s Free Speech Union, its founder Toby Young and his publication, the Daily Sceptic. The accounts were suspended amid disputes involving commentary on COVID-19 vaccination policies and lockdown measures. PayPal subsequently restored access following criticism from free speech advocates and British lawmakers, raising questions about the standards used in its original decisions.
The company also faced controversy in 2022 after publishing an acceptable use policy that appeared to authorize penalties of $2,500 for certain activities involving misinformation or objectionable content. PayPal quickly reversed the change, saying the language had been published in error and was never intended to become part of its policies.
Other organizations affected by account restrictions have included conservative parental rights group Moms for Liberty and the left-leaning publication Consortium News. Just the News identified approximately 20 cases involving customers whose accounts were restricted or terminated under circumstances raising questions about political discrimination. The examples also included a legal fundraising effort for Chelsea Manning, the alternative social media platform Gab and Joy in Liberty, which raised transportation funds for Trump supporters.
Those incidents formed part of ADF’s July objection to PayPal’s banking application. The organization argued that the company’s history of account enforcement raised concerns about whether it would provide financial services consistently and without discrimination. It also cited restrictions affecting evolutionary biologist Colin Wright and questioned why several disputed account closures were subsequently reversed following public or political pressure.
ADF announced Thursday, Nov. 5, that it was withdrawing its opposition after PayPal implemented revised policies addressing the organization’s principal concerns.
Its new commitments “are an important step toward preventing the unfair debanking of its customers,” ADF senior counsel Jeremy Tedesco said. He encouraged other financial institutions to establish similarly objective account standards rather than relying on terminology open to broad interpretation.
The dispute comes amid increased federal scrutiny of financial institutions accused of denying services for political or religious reasons. In March, Federal Trade Commission Chairman Andrew Ferguson warned payment processors, including PayPal, that terminating customers because of protected political or religious expression could violate consumer protection laws when those actions contradict the companies’ representations about their services.
Ferguson’s warning followed President Donald Trump’s August 2025 executive order addressing politically motivated debanking. The administration has argued that financial institutions should base account decisions on legitimate risks rather than customers’ lawful beliefs, affiliations or political activities.
The Office of the Comptroller of the Currency also released findings in October identifying discriminatory account practices among major financial institutions. Comptroller Jonathan Gould described the agency’s findings as “irrefutable evidence that the nation’s largest banks have denied, debanked and discriminated against customers and lawful businesses.”
The broader debate has involved both conservative and progressive groups. Critics contend that allowing financial companies to restrict services based on controversial viewpoints can limit access to essential financial infrastructure, while payment providers maintain that they must retain authority to address fraud, unlawful activity, financial risk and violations of their contractual obligations.
PayPal’s revised frequently asked questions now state that the company considers legal, regulatory, financial and contractual factors when reviewing accounts. The language emphasizes that enforcement decisions should be connected to account activity and legitimate compliance concerns rather than a customer’s political affiliation or other protected characteristics.
The company’s banking application adds regulatory significance to those commitments. Federal regulators must consider several factors when evaluating applications for deposit insurance, including an institution’s financial condition, management, business plans and ability to serve its proposed community. Although ADF has withdrawn its objections, the policy revisions do not guarantee that PayPal Bank will receive approval.
The FDIC has not publicly evaluated the allegations raised by ADF or Just the News. Agency spokesperson Brian Sullivan told the publication, “we traditionally decline to comment on correspondence we receive.” Just the News also reported that PayPal did not respond to its questions about the apparent differences between its current explanation of account restrictions and previous enforcement actions.
The revisions represent a significant development for PayPal as it seeks to expand its banking operations while responding to criticism of its account policies. They also leave unresolved questions about the company’s past decisions and whether the new standards will prevent similar disputes.
For now, PayPal’s proposed bank remains under regulatory review, with the company’s revised account policies providing an additional measure for federal officials and customers to assess its commitment to fair access to financial services.
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