Let’s talk about something a little different today. I often talk about places where you shop, but today, it’s about how you pay — specifically, PayPal.
PayPal is one of the most popular third party payment processors, allowing both individuals and businesses to send and receive money. For years, it was affiliated with eBay, but eBay announced it was spinning off PayPal in 2014. In 2021, the so-called divorce was finalized since sellers could no longer get their payouts via PayPal.
Currently, PayPal is a payment option for a large number of websites, including Right Stuf, Walmart, and more. By using PayPal, shoppers avoid giving their credit card information to a website and also easily track transactions in one place.
Users Declare a Potential New Acceptable Use Policy as Unacceptable
First, you may have heard about a controversy surrounding a new terms of use from PayPal. In a document that was leaked, a new acceptable use policy (AUP) for the payment service had a section where if the company found users to be spreading misinformation or intolerance, PayPal could charge them $2,500.
Of course, people were outraged, they felt PayPal could play judge, jury, and financial executioner. Most other social media platforms have penalties for violating decency and ethics policies involving suspensions or expulsions, which goes against how they make their money (more users = more they can charge for ad fees on their platform), but PayPal would personally benefit by claiming users were posting falsehoods or bigoted statements. This would lead to a lot of questions regarding their impartiality, as they would have a strong motive to accuse consumers and could quickly charge accounts for each violation.
Note that PayPal has had similar verbiage for years about prohibited activities, but this version of their AUP was much broader than how they spell out you can’t use PayPal to sell counterfeit goods, breaking laws, harass PayPal employees, opening another PayPal account after being kicked off, etc.
As this story broke, there was a lot of outrage, including from old PayPal executives. PayPal then said this policy, which was dated as of November 3rd, was distributed “in error”, which of course led to questions how a major corporation drafts such language accidentally. The Consumer Financial Protection Bureau (CFPB), an agency dedicated to protecting people from predatory financial companies and practices, is reportedly now looking at PayPal’s ability to fine users. But if a recent court ruling is upheld, the future of the CFPB will be in jeopardy and subject to the whims of Congress versus the more independent Federal Reserve (the Fed).
But let’s move to changes PayPal is actually going through with.
PayPal Aims to Sweeten Its Rewards
Over the years, PayPal has tried to expand its influence and has acquired other companies. One of its purchases was Honey, a rewards website, in 2019. With Honey, shoppers could earn money back on purchases by clicking through a Honey link.
Now, PayPal is merging Honey and other PayPal cashback programs into the PayPal app as PayPal Rewards.
Details are still a bit scarce, as it is just starting to roll out to US customers, and some features like rewards from PayPal cards coming at a yet-to-be-announced date. But PayPal boasts this program will allow for a simplified system with more offers and payout options.
Who wouldn’t like more cashback while shopping, but that also comes at a price — the price of return shipping.
Return Shipping on PayPal Will Soon Be on You
As I discussed here, up to 12 times a year, PayPal would allow users who needed to send back an order to either request a shipping label from PayPal or to file for reimbursement for return shipping, up to $30 each time. While a lot of online purchases can be returned to a store or have the seller pay to receive an item back, many stores require the buyer to pay to send things back no matter if it is a case of buyer’s remorse or defective product. Considering most items (bar appliances, TVs, and the like) don’t cost $30 to ship (especially if using discounted shipping options through PayPal and the like), Return Shipping on Us was a nice benefit to ensure consumers wouldn’t lose money on a purchase since its introduction in 2015.
Unfortunately, as of November 27th, Return Shipping on Us will be no more. The fact that this date is just before Cyber Monday is likely not a coincidence.
Note that according to the terms, this does not mean that orders from November 26th are eligible to be sent back on PayPal’s dime. November 26th is the last day to request a label or refund. With the busy holiday season and taking in to account the time it takes for a store to ship things out, a carrier to deliver it, and the buyer to open/try the purchase, it’s more like Return Shipping on Us is ending mid-November for new orders — and probably more like early November effectively.
I’m sure a lot of people have never taken advantage of Return Shipping on Us, as it was a benefit often easily missed or forgotten about. But, for example, Zulily advertises PayPal Return Shipping on Us on their website in the FAQ section. So it’s likely not only customers who are going to miss the program but businesses as well.
PayPal’s Current Situation and Future
But, in general, it just always stings when you have a consumer-friendly benefit ending. It’s not hard to understand why: PayPal’s stock is crashing, competition is rising, and inflation is affecting everything. The negative publicity regarding the AUP misinformation fine certainly didn’t help.
Plus, hedge fund Elliott Management bought a significant stake in the company. You may recognize this firm as the owners of Barnes & Noble, although they’ve owned or dabbled in many other companies over the years, from Twitter to Samsung to AT&T and even nations Argentina.
Pinterest is another company Elliott has recently gotten involved in. And a year ago, it was reported PayPal was looking to acquire Pinterest.
Perhaps it could be a coincidence Elliott has invested in both, or the activist investment firm may soon pressure PayPal and Pinterest to merge. Either way, the activist firm certainly wants PayPal to find a way to invigorate itself, and cutting costs is always a strategy.
True, for many, the loss of a seldomly-used benefit may be greatly outweighed by more and/or higher cashback offers with PayPal Rewards. I use Honey a lot thanks to the extension, and of course I’d love to earn even more, but it still stings to lose that extra piece of mind with returns, especially for categories like clothes, which are often a crapshoot when buying. I have also used PayPal Return Shipping on Us once or twice regarding a Right Stuf order.
True, I do most of my regular shopping at places like Amazon and Walmart, where I get free shipping on all orders (either always or as a membership benefit) or can return items to a local store. However, there are a lot of chains which aren’t local to me, and with PayPal Return Shipping on Us, I didn’t have to worry if they offered free returns or not. While I always check on a store’s return policy, I do need to scrutinize them a little more carefully now.