In September 2015, PayPal reappeared as a payment processor at some newly legalized US online gambling sites operating in the state of New Jersey. Since the May 14, 2018, Supreme Court of the United States overturn of the Professional and Amateur Sports Protection Act of 1992, PayPal has been widely available to customers in states where sports betting has been legalized for both depositing and withdrawing money.

By 2016, ConsumerAffairs had received over 1,200 consumer reviews of PayPal, resulting in an overall satisfaction rating of one star out of five for the company. Consumers have also launched numerous anti-PayPal Facebook pages and Twitter accounts to air their complaints.

In February 2017, PayPal froze the account of News Media Canada, a Canadian trade association, in response to a payment from The Reminder, a Flin Flon, Manitoba community newspaper, that was intended to cover the fee for the Reminder's submission of articles for consideration in a nationwide journalism contest run by News Media Canada, including one discussing Syrian refugees. PayPal cited United States regulations as a reason for flagging the transaction between Canadian entities.

In September 2018, PayPal banned radio host Alex Jones and his website InfoWars, saying that his site has content that is hateful and discriminatory against certain religious groups.

PayPal discontinued payments to Pornhub models on November 14, 2019, alleging that "Pornhub has made certain business payments through PayPal without seeking our permission". Pornhub criticized the decision as one that affected "over a hundred thousand performers who rely on them for their livelihoods" and steered its payees toward other payment options.

In September 2020, PayPal issued new terms of service which introduced a fee for inactive accounts in 19 countries. PayPal sent its clients an email about the updated terms, but did not mention introducing such a fee.

PayPal faces criticism over its policy requiring that the name on a user account must match the account holder's legal name, and that any user seeking to change the name on their account must provide government-issued photo identification. Trans and nonbinary users and rights advocates object because this means that any trans user whose preferred name differs from their legal name is forced to use their deadname instead. They say this is not only disrespectful, but also endangers trans users, because the name on the PayPal account is revealed to the payee whenever a user makes a payment, thereby outing the user and potentially exposing them to people who may harass or injure them. By contrast, other financial companies, such as MasterCard, have made it easier for trans and nonbinary users to change the names on their accounts.

In July 2021, PayPal announced a plan to collaborate with the Anti-Defamation League (ADL) Center on Extremism, the League of United Latin American Citizens, and several other nonprofits to analyze its users' transactions in order to investigate the finances of extremist and hate groups in the United States, and to share the results with law enforcement, policymakers, and other financial corporations. The ADL's CEO, Jonathan Greenblatt, stated that this initiative is meant to help "mitigat[e] extremist threats." PayPal reversed the decision a few days later.

In October 2022, PayPal published an update to its Acceptable Use Policy that included a $2,500 fine for the accounts of users PayPal deemed to have been promoting misinformation. Former PayPal president David A. Marcus criticized the change, tweeting that "PayPal's new AUP goes against everything I believe in". Elon Musk, co-founder of X.comwhich merged with Confinity to form PayPalalso criticized the change. Following media scrutiny and criticism on social media, PayPal removed the updated policy from its website, stating, "An AUP notice recently went out in error that included incorrect information. PayPal is not fining people for misinformation and this language was never intended to be inserted in our policy. Our teams are working to correct our policy pages."

Litigation

In March 2002, two PayPal account holders separately sued the company for alleged violations of the Electronic Funds Transfer Act (EFTA) and California law. Most of the allegations concerned PayPal's dispute resolution procedures. The two lawsuits were merged into one class-action lawsuit (In re: PayPal litigation). An informal settlement was reached in November 2003, and a formal settlement was signed on June 11, 2004. The settlement requires that PayPal change its business practices (including changing its dispute resolution procedures to make them EFTA-compliant) and make a US$9.25 million payment to members of the class. PayPal denied any wrongdoing.

In June 2003, Stamps.com filed a lawsuit against PayPal and eBay claiming breach of contract, breach of the implied covenants of good faith and fair dealing, and interference with contract, among other claims. In a 2002 license agreement, Stamps.com and PayPal agreed that Stamps.com technology would be made available to allow PayPal users to buy and print postage online from their PayPal accounts. Stamps.com claimed that PayPal did not live up to its contractual obligations and accused eBay of interfering with PayPal and Stamps.com's agreement, hence Stamps.com's reasoning for including eBay in the suit.

Craig Comb and two others filed a class action against PayPal in Craig Comb, et al. v. PayPal Inc., alleging illegal misappropriation of customer accounts, and detailing their customer service experiences, including the freezure of deposited funds for up to 180 days until dispute resolution by PayPal. PayPal argued that the plaintiffs were required to arbitrate their disputes under the American Arbitration Association's Commercial Arbitration Rules. The court ruled against PayPal, stating that "the User Agreement and arbitration clause are substantively unconscionable under California law."

In September 2002, Bank One Corporation sued PayPal for allegedly infringing its cardless payment system patents. The following year, PayPal countersued, claiming that Bank One's online bill-payment system was an infringement against PayPal's online bill-payment patent, issued in 1998. The two companies agreed on a settlement in October 2003.

In November 2003, AT&T Corporation filed suit against eBay and PayPal claiming that their payment systems infringed an AT&T patent, filed in 1991 and granted in 1994. The case was settled out of court the following month, with the terms of the settlement undisclosed.

In June 2011, PayPal and Israel Credit Cards, Ltd. (CAL)a credit card issuer subsidiary of Israel Discount Bankwere sued for NIS ₪16 million. The claimants accused PayPal of deliberately failing to notify its customers that CAL was illegally charging them for currency conversion fees.

A class-action lawsuit filed in 2010, in which the plaintiffs contested PayPal's "holds" on funds, was settled in 2016.

PayPal has proposed a settlement in the amount of US$3.2 million in Zepeda v. PayPal which has yet to be ratified. As part of the settlement proposal, the company agreed to change some of its policies.

In 2017, following a class action lawsuit between PayPal and its users over unexplained account closures, a settlement agreement was reachedand granted final approval by a federal judgein which PayPal agreed to pay the class US$4 million, modify the disclosure of its reserve and hold practices, and clarify its dispute resolution process.

In January 2022, a class-action lawsuit was filed against PayPal that claims the company froze accounts without providing adequate explanation, or for arbitrary reasons, and that PayPal told account holders they would "have to get a subpoena" to learn why their accounts were frozen. The lawsuit alleges that PayPal also confiscated funds for itself after 180 days, violating both the RICO Act and PayPal's own policies.

In March 2026, the Federal Trade Commission issued a warning against PayPal and three other payment processing brands for debanking of law-abiding citizens over political, religious or certain law-abiding activities.

On 21 May 2015, PayPal agreed that PayPal Credit would pay a US$25 million fine to settle a complaint filed in federal court by the U.S. Consumer Financial Protection Bureau. The complaint was filed in the United States District Court for the District of Maryland, which ordered PayPal Credit to refund $15 million to consumers and to pay a $10 million fine.