The account was promoted on a donation page ran by The Loyal White Knights of the Ku Klux Klan, the BBC News reported.
The white supremacist group claimed the “donation blessing for the cause” would be used for the postage of newsletters and other materials it sends to supporters, and to organize public rallies.
After a screenshot of the donation page was shared on Twitter by Nandini Jammi, who works for social media activist group Sleeping Giants, it was subsequently spread across the online platform by other users.
“Oh cool you can donate to the KKK with @PayPal,” Jammi tweeted on Aug. 24. “@AskPayPal can you explain this?”
The page was also publicized by Sleeping Giant’s main Twitter account and Canadian anti-hate crimes group NoPlace2Hate.
The social media outcry eventually caught the attention of PayPal, which suspended the account days later. The page now features a notice saying the recipient is “currently unable to receive money,” the BBC reported.
Jammi said that despite PayPal’s eventual suspension, she worries the company is not equipped to handle such incidents in the future.
Following the Unite the Right rally in Charlottesville, Va., in 2017, PayPal pledged to “evaluate all sites” brought to its attention that may promote hate, violence or intolerance.
A PayPal spokesperson issued a statement to BBC regarding the KKK-linked account.
"Due to our legal and data protection obligations, we cannot comment on any specific PayPal customer's account,” the statement read. "We carefully review accounts to ensure our services are used in line with our acceptable use policy and take action as appropriate.”
"We do not allow PayPal services to be used to promote hate, violence, or other forms of intolerance that are discriminatory,” the spokesperson added.