PayPal reveals plan to share user data with merchants

Users are automatically opted in to data sharing

PayPal, the popular online payment platform, is rolling out changes to its privacy policy, allowing the automatic sharing of user data with third-party vendors unless users actively opt out.

The updated policy will come into effect on 27th November 2024, following which PayPal will start collecting user data. It will then be shared with participating stores in the summer of 2025.

"We are updating our Privacy Statement to explain how, starting early Summer 2025, we will share information to help improve your shopping experience and make it more personalized for you," the company says in an online post about its upcoming policies.

"The key update to the Privacy Statement explains how we will share information with merchants to personalize your shopping experience and recommend our services to you. Personal information we disclose includes, for example, products, preferences, sizes, and styles we think you'll like."

Residents of California, North Dakota, and Vermont are exempt from this default data-sharing rule. In these states, PayPal must receive explicit permission from users before any data is shared, reflecting the stricter privacy laws in place in these regions.

The move has raised concerns among privacy advocates and users alike. Many fear that the sharing of personal information could lead to targeted advertising, identity theft, or other privacy breaches.

One of the most contentious aspects of the new policy is that users are automatically opted in to data sharing. This means that users must actively opt out if they wish to keep their information private.

In the EU, stricter data protection laws, such as GDPR, require explicit consent for data collection and sharing.

While the specific details of the policy changes may vary slightly between countries, the overall impact is similar.

The ser Agreement update will not affect UK users, according to PayPal.

Additionally, PayPal has clarified that merchants are permitted to share customer information with their service providers.

To opt out of PayPal's new data sharing policy, users must access their profile settings and navigate to the relevant privacy options.

The steps to follow may vary based on the user's location. For example, users in the US can access this option by navigating to Settings -> Data & Privacy -> Manage Shared Info -> Personalized Shopping. By default, the option will be enabled, and to opt out, users must switch off the toggle on the right.

PayPal is far from an outlier in adopting this sort of data practices. In recent months, several other digital platforms have silently enabled the training of their AI tools on user data. This means that personal information and posts are being used to improve these platforms' algorithms, often without the user's knowledge or approval.

In a recent disclosure, LinkedIn's Senior Vice President and General Counsel, Blake Lawit, said that the company has been collecting and analysing user posts, articles, and other data to improve its generative AI capabilities.

Similarly, Meta and Snap have faced criticism for using user data to train AI models.

Meanwhile, platforms like Reddit and Stack Overflow have formalised data licensing agreements with AI companies, allowing their models to be trained on vast amounts of user-generated content.

This article was updated following clarifiction from PayPal that UK user will not be affected.