PayPal shares drop due to 4.5 million illegitimate accounts

PayPal CFO John Rainey disclosed that 4.5 million accounts had been shut down after “bad actors” took advantage of incentives and rewards programmes, resulting in shares falling by 25%.

PayPal representatives revealed that inflation and supply chain disruption were to blame for customers with lower incomes spending less and an increase in in-store shopping.

The company is changing its customer acquisition strategy to move away from incentive programs and focus on sustainable growth and driving engagement, or getting current customers to use PayPal’s apps more often.

In an attempt to reach this goal, PayPal had started to offer $10 incentives to those opening new accounts in 2021, but recently found that many accounts had been created by bot farms.

Rainey said, “We regularly assess our active account base to ensure the accounts are legitimate. This is particularly important during incentive campaigns that can be targets for bad actors attempting to reap the benefit from these offers without ever having an intent to be a legitimate customer on our platform.”