PayPal confirms data exposure triggered forced password reset

PayPal has confirmed that a data exposure incident affected a small group of its users which led to unauthorised activity and mandatory password resets.

According to official breach notification letters sent to impacted customers, the issue dates back to July 1, 2025, when a flaw in the PayPal Working Capital (PPWC) loan application system unintentionally allowed unauthorised access to certain PayPal accounts.

This condition persisted unnoticed until December 12, 2025, when PayPal identified and contained the issue.

The company said the exposure was linked to a software error rather than a large-scale external hack, and that its core systems were not directly ‘compromised’ in the traditional sense.

Still, the glitch inadvertently exposed some customers’ personal information which include names, email addresses, phone numbers, business addresses, dates of birth, and Social Security numbers to unauthorised parties.

PayPal reports that around 100 customers received breach notifications and were affected by this incident.

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Some of these accounts also showed unauthorised transactions, though PayPal confirms that refunds have already been issued to those customers.

As part of its response, PayPal has terminated the unauthorised access and removed the faulty code that caused the exposure.

Passwords for affected accounts have been reset and users will be required to choose new credentials when they next attempt to log in.

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The company is offering two years of free credit monitoring and identity restoration services through Equifax to those impacted.

PayPal urged all users to stay vigilant, regularly check their account transactions, monitor their credit reports, and be cautious of phishing attempts or suspicious messages.

Folake Balogun is a tech journalist covering Africa’s fast-growing digital economy with a strong focus on incisive analysis of startup trends, venture capital, and fintech innovation, while also exploring emerging technologies such as artificial intelligence and the future of connectivity by highlighting their economic and social impact.

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