Overall that may be being too pedantic, and shouldn't give PayPal a pass on the issue. Perhaps even entertaining it is just muddying the waters allowing PayPal to slip away. The extra check is a security check. If cybernews have by bypassed it then they have bypassed a security check. Logically this is therefore a security issue, and if PayPal are saying that it's not a security concern then they're saying that they were just wasting everybody's time with the unnecessary check to begin with. That would clearly be a lie, as the fact that they developed and continued to use the system indicate that they think it provides security.
> I'd definitely call this 2-factor authentication -
You'd be misunderstanding what "authentication" means then. Notification and authentication are different things. Email is notification, not authentication. Confusing it means either not knowing what authentication is, or purposely confusing matters to present issue as something it isn't.