Non-fungible tokens, or NFTs, will no longer be covered by PayPal's buyer protection policies, according to a change made at the end of last month.
PayPal's buyer protection policies offer users protection against possible attempts at fraud or scam. Thus, if a buyer does not receive an item or product, or receives one that is used, damaged, fake or does not match the description given by the seller, they can file a claim to request a refund and get their money back.
These protection policies were applicable to digital artworks and digital collectibles in NFT format, which can be purchased on different market platforms using Paypal as a payment method. However, according to a modification which was carried out on March 21 to the company's protection policies, The purchase of NFT tokens will no longer be covered by this program, excluding transactions of these digital assets, regardless of the amount, from May 20.
Likewise, the changes made by PayPal to its protection policies also remove some of the protections that the platform provided to NFT token sellers.
Specifically, the company noted that only NFT transactions that are reported as unauthorized, have a transaction value of less than $10.000, and meet other detailed eligibility requirements will be eligible for the company’s protection program. This reiterates changes the company announced in 2022, which exclude non-fungible token transactions above the $10.000 threshold from protections.
Similar to the announced changes to the buyer protection policies, changes to PayPal's seller protection policy also will come into force from May 20 of this year.
NFTs will not be eligible for the Paypal Protection Program
The electronic payments giant introduced these changes in March, however, they went unnoticed until this week.
Previously in 2022, the company had excluded transactions involving non-fungible tokens that exceeded the $10.000 threshold from its protection policies. At the time, it said it had expanded its list of items ineligible for protection to include those with a transaction value of more than $10.000.
For some, the new updates announced by Paypal, to take effect in May, expose merchants and collectors of these digital assets to greater risk, due to their digital and decentralized nature. For buyers, the protection policies provided security against counterfeit works, while for sellers they provided protection against possible fraudulent refund requests and unauthorized transactions.
According to The Block, a company spokesperson indicated that the exclusion of NFTs from the buyer and seller protection program is due to the uncertainty surrounding proof of order fulfillment.
Additionally, the spokesperson cited the constant evolution of the crypto industry, which has created other variables that have forced the company to reconsider the protections it provided for non-fungible token transactions. “We are no longer providing buyer protection and are limiting seller protection for NFTs,” the spokesperson confirmed.
Continue reading: Google inaugurated a new office in El Salvador to accelerate digital transformation
