Thanks for reporting. This has been tested in v2.8.9, and is working correctly. If you're still getting this error, please try this:
1. Triple-check your PayPal/Auto-Return configuration. Log into your PayPal Account, and go to: Profile -> Website Payment Preferences. Turn Auto-Return on, and ALSO enable PDT ( Payment Data Transfer ). Both of these features should be turned on. Once you've turned these on, PayPal will give you an Identity Token for PDT. You'll need to copy/paste your Identity Token into the s2Member -> PayPal Options panel.
2. Are you in Sandbox testing mode? If so, is your PayPal Email Address configured with a Sandbox address, or with your real PayPal Email Address? When doing Sandbox tests, you MUST have a Sandbox Business account configured for s2Member, and not your real PayPal address.
3. If you are Sandbox testing, make sure that you generated your PayPal Button Codes after you turned Sandbox mode on. If you're Sandbox testing, using Button Codes that were generated for a live site, you will have problems.
Please report back if possible. I'm happy to assist.