Paypal Throws Caution To The Wind: Buyer & Seller Protections For NFTs Removed

• Starting May 20, a revised PayPal policy will no longer extend buyer protection to NFT purchases.
• Moreover, NFT transactions exceeding $10,000 will not be safeguarded against fraudulent claims or chargebacks.

PayPal has quietly adjusted its terms of service, removing buying and selling protections for non-fungible token (NFT) transactions, marking a partial reversal of its prior policy.

Starting May 20, PayPal’s new policy removes buyer protection for NFT purchases. Additionally, NFT sales exceeding $10,000 will no longer be covered by the company’s safeguards against false claims, chargebacks, or scams affecting sellers’ finances.

“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 CoinNerd. 

The company announced its intention to discontinue protections for certain NFT-related transactions on March 21, as indicated on its website. However, these changes have gone unreported until now.

“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:

CoinNerd’s request for comment from PayPal went unanswered at the time of publication.

Initially, PayPal’s buyer and seller protection programs covered NFT transactions, but later, support for sellers of these tokens was restricted. The former program reimbursed buyers for misrepresented items paid for via PayPal, while the latter compensated sellers affected by payment disputes and fraudulent refund requests, as detailed on the platform’s website.

In recent years, PayPal has exhibited subtle indications of its increasing interest in blockchain-based digital art and assets. In 2022, the company introduced cryptocurrency support on its primary platform. During the same period, PayPal also filed a patent application for an NFT purchase and transfer system that proposes offering users royalties and other incentives.

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