If you run a rooted phone and download malware, that malware can gain root and do payments on your behalf. Then PayPal has to deal with you revoking payments etc., they don't want to so they forbid you from using PayPal on a rooted phone.

Graphene OS does not support root. This is a false positive based on some check they are doing.

One thing that I'm actually excited about regarding AI is that the pointless policy checkboxes that have never been effective in adding any actual security are even less so effective now that everyone can wield their very own security researcher.