Understanding Paddle's New Acceptable Use Policy

Hi, I'm Alex, and welcome back to the Boathouse paddle series, where we talk about everything related to Paddle. Today, we're diving into the recent changes to Paddle's Acceptable Use Policy (AUP), which governs the types of products you can sell via Paddle. Let's jump right in and understand what these changes mean for you as a vendor, and how they protect both Paddle and its community.

Summary of Paddle's Acceptable Use Policy Changes

Paddle has made some significant changes to its Acceptable Use Policy. Previously, the distinction was straightforward: if you had a digital product or service, you were likely to be accepted. However, recent updates have introduced new rules, especially regarding AI-generated content. Here’s a breakdown of the major points:

1. Digital Products and Services: Historically, these were accepted with some exceptions (illegal content, physical products, etc.).
2. AI-Generated Content: New restrictions now apply to AI-generated images, face swaps, deepfakes, and voice impersonations.

Why Paddle Made These Changes

Risk Management

Paddle takes on a substantial risk by accepting vendors, as they effectively resell your products. This dual role as a merchant of record means they must ensure their platform and all vendors adhere to stringent rules to avoid issues with tax handling and product legitimacy.

• Merchants of Record: Paddle must handle taxes and compliance for digital services, which becomes more complex with physical products.
• Vendor Protection: By enforcing strict rules, Paddle protects all vendors on their platform from the risk of losing payment providers.

The New AI Rules

What’s Not Allowed

Paddle’s updated AUP now includes specific prohibitions on AI-generated content. This includes, but is not limited to:

• Face Swaps
• Deepfake Images and Videos
• Voice Impersonations

Payment Provider Rules

Paddle’s rules are influenced heavily by their payment providers, particularly Visa and Mastercard. These companies have strict guidelines on user-generated content, which AI-generated images fall under.

All content must be reviewed prior to publication or in real time if it's live streamed and you can't violate the card brand, business or risk assessment.

Historical Context

Let's step back a bit and look at how these rules have evolved. For instance, back in 2021, Mastercard introduced rules specifically about user-generated content. These rules mandate rigorous checks and real-time reviews to ensure compliance and reduce risks.

In line with these, Paddle’s decision aligns with the need to regulate AI-generated content strictly to avoid misuse or illicit activities.

Impact on Vendors

Small vs. Large Vendors

For smaller vendors, these changes can be challenging. Implementing checks and balances for AI content requires resources that may not be feasible for indie developers.

• Indie Developers: May struggle due to the lack of resources to implement necessary checks.
• Larger Companies: More likely to have the means to comply with these stringent rules.

Alternative Solutions

For developers who can't meet these requirements, exploring other payment providers might be a practical choice. There are several alternatives that may not have such stringent rules for AI-generated content.

Looking Ahead

Paddle continues to monitor and adjust their policies to align with new regulations and payment provider rules. This dynamic nature means changes could happen again as the landscape evolves.

This area has gotten a little bit harder to sell on Paddle. But there are other payment providers for exactly that reason that you can go ahead and try.

Conclusion

While these changes may seem restrictive, they ultimately serve to protect both Paddle and its community of vendors. By adhering to these updated rules, you’re ensuring a safer, more compliant platform for everyone involved. If you’re a vendor affected by these changes, consider adapting your approach or exploring alternative platforms to continue your business uninterrupted.

Stay tuned for more updates and insights in the Boathouse paddle series. If you have any questions or need further clarification, feel free to reach out.

That's all for today!