I know this is an old thread but I had a similar issue and wanted to share the resolution for others who might be searching for a solution to this issue. My auto pay was moved to inactive for a merchant. I was instructed to contact the merchant and establish a new user agreement for my PayPal account. The merchant was not displaying PayPal as an option, because my bank account was no longer confirmed for this merchant. PayPal support confirmed the bank account associated with my PayPal account and this resolved the issue.
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