PayPal _was_ legitimately owed money. I don't think that's at question - when you die with a debt, that doesn't "erase" the debt. The issue here isn't "dying with debt", it's PayPal's phrasing of this - "Hey, being dead is a violation of your agreement". A less insensitive letter that indicated that there was a $3200 balance against the estate wouldn't have raised any eyebrows (unless UK credit laws are very unusual).