PayPal to Levy Fines for Gambling, Porn, Drug Payments

PayPal Inc. said Monday that it would start fining customers as much as $500 for using the online payment service on gambling, pornography and illegal sales of prescription drugs.

Those payments are already prohibited under PayPal’s acceptable-use policy, but Sept. 24 will mark the first time the EBay Inc.-owned company will fine customers for violations. PayPal also said it could take legal action to recoup any costs not covered by fines.

PayPal spokeswoman Amanda Pires said the policy covered only people or companies selling barred products, though those attempting to pay for them could have their accounts curtailed or closed.

PayPal has barred gambling-related payments since 2002, when EBay acquired it.

In 2003, San Jose-based PayPal stopped handling payments for adult-oriented content.

Pires said those industries were targeted because they tended to experience more fraud than others.

PayPal will continue to process payments for online pharmaceuticals as long as the sellers are certified by the National Assn. of Boards of Pharmacy.

“This is a new policy to ensure that online pharmaceutical companies are dispensing drugs within the law,” Pires said.