PayPal removes buyer and seller protections for NFTs
Quick Take
- Under a new PayPal policy, effective May 20, NFT purchases will no longer be backed by the company’s buyer protection program.
- In addition, NFT sales worth more than $10,000 will not be protected against false claims and chargebacks.
PayPal is quietly stripping buying and selling protections for non-fungible token-related (NFT) transactions in a partial reversal of its previous policy, according to the firm's little-noticed terms-of-service update.
Under the new policy, effective May 20, NFT purchases will no longer be covered by PayPal's buyer protection policy. Additionally, NFT sales worth more than $10,000 will no longer be backed by the company’s guarantee against false claims, chargebacks or other scams that may cause sellers to lose money.
"Given the uncertainty around proof of order fulfilment and other variables in this evolving industry, we are no longer providing buyer protection and are limiting seller protection for NFTs," a PayPal spokesperson told The Block.
The company published a notice about its plans to stop providing protections for some NFT-related transactions on March 21, its website shows. But, until now, those changes have remained unreported.
"Effective May 20, 2024: We are revising PayPal’s Purchase Protection Program to exclude from eligibility: Non-Fungible Tokens (NFTs)," PayPal said on its policy updates page under the section "Amendments to PayPal’s Purchase Protection Program."
In its "Amendments to PayPal’s Seller Protection Program," PayPal said:
Effective May 20, 2024:
- We are revising PayPal’s Seller Protection Program to exclude from eligibility Non-Fungible Tokens (NFTs) with a transaction amount of:
- $10,000.01 USD or above (or equivalent value in local currency as calculated at the time of the transaction);
- $10,000.00 USD or below (or equivalent value in local currency as calculated at the time of the transaction), unless the buyer claims it was an Unauthorized Transaction and the transaction meets all other eligibility requirements.
PayPal did not immediately respond to The Block's request for comment.
Previously, NFT purchases and sales were initially backed by PayPal’s buyer and seller protection programs, although the company later limited its support for the tokens' sellers. The former program refunded buyers for falsely advertised items paid for with PayPal, while the latter reimbursed sellers who lost money to payment disputes and fraudulent refund requests, according to the platform’s website.
In recent years, PayPal has shown subtle signs of its growing interest in blockchain-based digital art and digital assets. In 2022, PayPal rolled out support for cryptocurrencies on its main platform. That same year, the company also filed a patent for a NFT purchase and transfer system that would offer users royalties, among other rewards, a PayPal patent application shows.
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