PayPal Warns Gamblers, But Lets Them Keep Their Winnings

Photographer: Gregory Shamus/Getty Images

PayPal is restricting the accounts of users it suspects of using the service to place bets on the NCAA tournament.

PayPal sent out some scary-looking e-mails this week to customers who the company believes are using their accounts for betting on the NCAA’s March Madness.

The e-mails are legit, unlike the constant flow of spam messages that hit our inboxes, but amateur bookies seem to be getting off with a light foul in this case.

PayPal has set some of the offenders’ accounts to “limited,” according to an e-mail obtained by Bloomberg News. That just means that the user can’t go in and shut down their profiles to cover up the evidence, according to a screen shot of a user’s log-in screen that we saw. Those users can still withdraw money from PayPal to their bank accounts, as well as send and receive more payments, the image showed.

In order to avoid “further escalation of this issue,” according to the e-mail, those PayPal users have to sign an online “Acceptable Use Policy affidavit,” which is a fancy way of describing those terms-of-service agreements that most people click “I agree” on without reading a word of.  PayPal gives users a few days to do this, during which time a gambler would be wise to withdraw his cash.

Despite the leniency in this policy, PayPal is being particularly proactive by finding accounts on its own, and sending messages to spook them. Realistically, how much more should PayPal do to crack down on something that some 58 million Americans do each year, according to a Microsoft study? Bloomberg Businessweek has a slam-dunk article about the prevalence of March Madness betting online.

For some historical context, PayPal came under some scrutiny a decade ago for its prospects as a convenient launderer of gambling money. When eBay spent $1.5 billion to acquire the digital-payments company, then-N.Y. Attorney General Eliot Spitzer challenged eBay, which pledged to stop allowing PayPal to be used for online gambling.

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