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Paypal’s Out to STEAL Creators' Copyrights, and Other Nonsense

7000174104_afa4f342c1_bA story has been circulating on Tumblr and on author blogs over the past week which hasn’t made its way into the media yet, and that’s a good thing because it’s bogus.

Numerous authors and other creators are saying that Paypal is a giant evil corporation which is about change its terms of service so it can rob creators of all the rights to all the content sold through its money transfer service.

They’re pointing to a new clause in the new ToS which will be going into effect on 1 July. That clause, which you can read on Paypal’s own site, says:

click to embiggen

click to embiggen

For those who can’t see the screenshot, the first sentence of the clause says:

When providing us with content or posting content (in each case for publication, whether on- or off-line) using the Services, you grant the PayPal Group a non-exclusive, worldwide, perpetual, irrevocable, royalty-free, sublicensable (through multiple tiers) right to exercise any and all copyright, publicity, trademarks, database rights and intellectual property rights you have in the content, in any media known now or in the future.

That clause is being interpreted by some creators to mean that Paypal is grabbing the rights to all the content _sold_ through the service, but that isn’t quite what it says.

What this says is that Paypal has a right to use the content uploaded to them.

What we are looking at here is a standard boilerplate contract clause the likes of which you would expect to find in digital distribution platforms. Amazon has a similar clause for KDP (see section 5.5). Dropbox, Kobo, and many other services have similar clauses.

To be clear, those clauses are in the KDP et al contracts in order to give the services the legal right to distribute a creator’s content on their behalf (the KDP clause is pretty clear on this point).

And now Paypal has decided it needs a rights clause. Given that Paypal does not offer any type of file transfer service, my mind boggles at the idea that Paypal would need this clause. I am even more confused by their decision to let a context-blind first-year law student write the clause.

Or perhaps they are letting a bot draft their legal contracts now, I don’t know.

Update: We might not know for sure why this clause was added but we suspect that Paypal plans to add file delivery to its payment processing.

In any case, I am about to go yell at Paypal. There’s no need for this clause to exist at all, but if Paypal really wants to have it then they are going to have to redraft it so it isn’t quite so egregious.

As it is now written, the clause could be interpreted as a way for Paypal to grab the rights. I do not think that is what Paypal intended, but I agree with the members of the WetCanvas forums who pointed out that is how it could be used.

It would not be impossible for Paypal or its lawyers to connect a specific financial transaction with a specific piece of content. That type of detail is recorded if you use Paypal’s shopping cart.

For example, a few weeks ago I bought an ebook from O’Reilly and paid via Paypal (it was related to the Sony piracy story). That transaction listed the title of the ebook, and under a certain interpretation of that clause Paypal has the right to do whatever they want with the book.

And for that reason, the clause needs to be redrafted. Luckily for us the new ToS do not go into effect until 1 July, so there is plenty of time for Paypal to fix the problems it has created.

image by VBC17melenita2012

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Felix April 30, 2015 um 8:53 am

You have to admit the clause in PayPal’s ToS *is* poorly worded. A similar clause in Tumblr’s legalese clearly states that Tumblr reserves the right to *store and reproduce* what you submit to them, *for the purposes of operating the website*. Which strictly limits what rights they claim, and what *for*. And it was still enough to have people up in arms.

It’s annoying enough that they force you to wade through a change document of dozens, if not hundreds of pages to find this. That I can’t be sure of the meaning of what I’m agreeing to without a law degree is downright worrying, and there is simply no excuse for it.

Nate Hoffelder April 30, 2015 um 9:42 am

It is very badly written, yes. But I also don’t think it is evil.

What is that maxim about never attributing to illwill what can be explained by stupidity?

Felix April 30, 2015 um 10:51 am

Stupidity can easily turn to evil though. E.g. when a stupidly-worded legal agreement can be exploited by unscrupulous lawyers.

Pete Morin April 30, 2015 um 12:41 pm

It’s better than the Human CentiPad.

Nate Hoffelder April 30, 2015 um 12:51 pm

LOL How did I know that was going to be Soutpark?

Moriah Jovan April 30, 2015 um 10:24 am

Given that Paypal does not offer any type of file transfer service, my mind boggles at the idea that Paypal would need this clause.

Got that email yesterday (or whenever). My first thought was, “Wai, wut? Paypal doesn’t have a file download service.” My second thought was, “Oh yay! Paypal’s preparing a file download service!”

Given how much of a fix Gumroad has left me in, I was doing the Snoopy Dance.

I’ll be there with bells on if this is what Paypal’s doing (please let it be, please let it be).

Nate Hoffelder April 30, 2015 um 10:30 am

I think that is what Paypal is going for, yes. They just mucked up the announcement.

fjtorres April 30, 2015 um 11:37 am

Maybe it’s tied to this?

Nate Hoffelder April 30, 2015 um 11:54 am


Nate Hoffelder April 30, 2015 um 1:41 pm

And thanks!

Ebook Bargains UK April 30, 2015 um 12:40 pm

From Paypal:

"Thank you for contacting PayPal in relation to the recent updates to our User Agreement.
We update our user agreement and privacy policy on a regular basis to ensure they’re up to date with our relationships with our customers, the nature of our business, our privacy practices or if there are changes in applicable law.
The Intellectual Property paragraph you mention essentially means that PayPal has permission to use content that you post for publication using our services.
Because hosting material on any web site involves copying, PayPal needs your permission to use such material in order to comply with intellectual property law (such as copyright law). We have attempted to make this update clear in the Policy Update text and apologise for any confusion caused.
Please let us know if you require any further assistance.
Yours sincerely,

Nate Hoffelder April 30, 2015 um 10:28 pm


I’d say that clinches it.

Paypal to Get Into eBook, App Distribution? | Ink, Bits, & Pixels April 30, 2015 um 1:49 pm

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Stuart Whitmore May 2, 2015 um 12:02 am

The "similar clause" on KDP is merely a "license to distribute", not "right to exercise any and all copyright, publicity, trademarks, database rights and intellectual property rights" that PayPal is claiming. Whatever their "intent" may be, and regardless of how a customer service person might interpret it when asked, the wording of the terms will be what matters in court.

My personal experiences with PayPal are extremely negative and I know I’m not alone in that. I would much rather give up the "convenience" of (having to pay excessive fees to) PayPal than leave a gaping loophole for them to try to reach through and grab my rights away from me.

Nate Hoffelder May 2, 2015 um 7:09 am

Part of the reason why I am less than worried is that way back in 2011 Dropbox used an almost identical clause in its ToS. After much yelling, they changed it to the much more friendly terms they offer now.

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K. S. Brooks May 15, 2015 um 3:18 pm

Thanks, Nate. You’re always on top of these things.

Judgeb4judged June 12, 2015 um 6:24 pm

Well, the letter they gave in response is 98% platitudes "please ignore the man behind the curtain"…as in please disregard the vague wording that will allow us to steal your content for our own profit and prevent you from either profiting from it or suing us, and then say that hosting content on any website involves copying, PayPal needs your permission[ to what exactly is it that requires copying is missing here ] to comply..[with the IP & C laws]. We have attempted to make the update clear [ and obviously failed ] and we are sorry [ screw you we’re not changing it now]. I have a lot of problems with this.

Paypal is simply an account on a server and some hypertext you put on your own pages to create a button on your site, that you host or pay for hosting, and that button takes a buyer of your content to a form on paypal website that they can fill out to pay you. When that is completed, PayPal then notifies you of payment and customer info and you have your server respond by sending them the content attached to a email, or a temporary link the customer can use to download the content, or you mail them the product(s). There really isn’t any reason PayPal needs to copy anything much from your site at all as far as I can tell other than the specific HTML/code used to perform this specific function, such as PayPal acct ID, domain name(maybe), amount, currency, customer info etc. They wouldn’t technically have to know anything at all about what your site was about or what you were selling. They also don’t really need to care if it is a hard or a soft product.

They often do actually have to/want to know these things because of laws against supporting illegal enterprises, and to provide customers with a level of protection, in case you don’t send them the product, and to protect their reputation ( you currently can’t buy porn with it) . Still, after all that, do not see why PayPal needs any form of non exclusive copyrights to any of your content. If your domain name is copyrighted as it should be, as long as they don’t sell that as part of a statistics bundle, they can have that stored in a log and not still need rights. If they did sell it, they should ask permission specifically for what they need, pay a royalty or give a discount or both.

The language of both the ToS and the letter are utterly to vague. specifically, the word "material" really could be used to argue it means anything a lawyer wants it to mean, including your entire website or ebook, or PDF, titles, names, characters, images, videos, et al. As a small business you’re effectively at there mercy because they can sue you into bankruptcy over this kind of vaugue wording. Even if they don’t win.

Since this company has been getting a very bad reputation over time for holding money for long periods with no explanation, making people sue them before releasing funds, and even numerous accusations of outright theft. They cannot really be a good way for us to pay for things going forward.

I think it is really time for me at least to consider using an alternative service unless they can turn things around immediately. I for one, am just about to publish my first ebook and website, because of this change, I will not be using PayPal unless it ToS is changed, without a lawsuit, to specifically itemize what "material" they need to "copy" is and what they are allowed to do with it. "Whatever they want to, forever" is unlikely to be at all acceptable.

There is no "we". There are only a lot of I’s that stand up and say "no, you don’t get to do that to me.". Only then can "we" change anything.

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