In June, PayPal.com amended its acceptable use policy to state:

Prohibited Activities. You may not use the PayPal service for activities that:

“4. involve the sales of products or services identified by government agencies to have a high likelihood of being fraudulent”

As a Web lawyer, I believe this provides PayPal with a lot of discretion because both the U.S. Federal Trade Commission (FTC) and state attorneys general are constantly identifying products and services that have a high likelihood of being fraudulent and deceptive online business opportunities.

If you see an unethical Internet marketer selling a bogus  info product online and using PayPal for payment, a quick note to PayPal about it that refers to the new acceptable use policy should be enough to get an investigation started at a minimum and probably get the account closed if the product is similar to something a government agency has already nailed for fraud. If you’re unsure, send a note to your Web lawyer.

To your success!

-Mike the Web lawyer