New York’s financial regulator documented a PayPal credential-stuffing incident from December 2022 in an enforcement order issued in 2025. It was not a new 2026 warning: the order says attackers used stolen login details to access exposed information in online tax forms. Here’s what happened and how to reduce the risk to your account.
Did PayPal warn users about credential stuffing?
The clearest public record is a 2025 consent order from the New York State Department of Financial Services (DFS), concerning a PayPal security event in December 2022. It describes an attack involving credential stuffing, not a separate recent PayPal warning specifically about that threat. Read the DFS consent order.
What happened in the 2022 incident
On December 6, 2022, a PayPal security analyst found an online message describing a way to view customers’ Social Security numbers. PayPal discovered that some online Form 1099-K documents contained unmasked names, dates of birth, and full Social Security numbers. The next day, PayPal detected a spike in attempts to access its platform and concluded that attackers were using credential stuffing to reach the exposed information.
DFS says the event affected tens of thousands of consumers, but the reviewed order does not give an exact count. That figure describes affected consumers; it is not a count of confirmed losses.
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How PayPal responded and what DFS found
PayPal added CAPTCHA and rate limiting, which DFS says stopped the automated account access. It masked the exposed information and forced password resets for affected accounts. DFS also found shortcomings in how PayPal applied cybersecurity policies, trained and oversaw engineering staff, and protected nonpublic information. The customer accounts accessed during the event did not require multi-factor authentication (MFA).
The 2025 order imposed a $2 million civil monetary penalty. It also records PayPal’s remediation, including clarifying policies, training staff, improving production-code monitoring, and requiring MFA for all US customer account logins. The penalty is a regulatory fine, not an estimate of consumer losses.
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What is credential stuffing?
Credential stuffing is an automated attempt to sign in using username-and-password combinations obtained from another source, such as a data breach. It succeeds when people reuse the same credentials across services: a password exposed elsewhere may then unlock a PayPal account.
It differs from brute-force guessing. Credential stuffing tests stolen credential pairs; brute-force attacks systematically try to guess passwords. Automated attempts may be paced to evade simple restrictions on unsuccessful logins, as the Federal Trade Commission (FTC) explains.
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How do I protect my PayPal account?
Use a unique password
Give PayPal a password you do not use anywhere else. PayPal recommends at least 12 characters and suggests a passphrase of three or more words; avoid common words and personal details. A distinct password limits the damage if another service exposes your credentials.
Use a password manager if it helps
A password manager can create and store separate passwords so you do not have to memorize each one. PayPal says password-manager apps can store and sync passwords. Protect the manager with a strong, unique master passphrase.
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Turn on 2-step verification
PayPal’s US security guidance describes setting up 2-step verification with an authenticator app or SMS. If available to you, the FTC recommends an authenticator app or security key over SMS or email; SMS can be vulnerable to SIM-swap attacks. PayPal’s US instructions document authenticator-app and SMS setup, while its passkey option is device-based—do not assume a standalone security key is supported for PayPal login. Never share a verification code: PayPal says it will not ask for one by phone, email, or text.
Consider a passkey on an eligible device
PayPal passkeys use your device’s biometrics, PIN, or unlock credential instead of a conventional password. Eligibility depends on the account and the device, operating system, and browser. Check PayPal’s current US account-security instructions for setup and compatibility.
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What should I do if I get a PayPal password reset message?
Do not click a reset link in an unsolicited message. Open a browser and type PayPal’s address yourself, or open the PayPal app, then sign in and check your account. Do not reply with your password or a verification code. A message that urges immediate action is not proof that it came from PayPal.
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What should I do if I see unusual PayPal activity?
- Change your password. Sign in through PayPal’s official website or app, not through a link in an unexpected message, and set a unique password.
- Review your account activity. Look for transactions or account changes you do not recognize.
- Contact PayPal through its site or app. Use its official channels to report suspected unauthorized access or fraud; PayPal directs users to its Security Center to report suspicious messages.
- Contact your card issuer about an unfamiliar card alert. PayPal advises contacting the issuer if you do not recognize an unusual card alert.
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