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Thread: Paypal was withholding crowdfunding campaign donations in 2013!

  1. #1
    Join Date
    Jan 2014
    Posts
    13

    Unhappy Paypal was withholding crowdfunding campaign donations in 2013!

    A friend of mine wants to start a crowdfunding campaign on Indiegogo.com to help raise money for a small water supply project in Africa. However, he's now worried about some news reports that Paypal withheld payouts on donations some other crowdfunding campaigns received last year, and even froze the accounts in question. Apparently Paypal demanded to see proof of budgets and spending plans for these campaign donations or they would hold the money for a year.

    Accepting Paypal does make it easier to receive payments from a lot of people, but would you trust Paypal to hand over the money you receive as donations?

  2. #2
    Join Date
    Jan 2014
    Posts
    347

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    Why wouldn't they want to see proof? Your friend might as well be a beggar or scammer and people will donate vast amounts of money for his "project" and in the end he just puts it in his pocket. This is what happens all the time and Paypal is trying to protect it's business.
    If all the people who donate money start to chargeback, Paypal is going to have a LOT of work to process all the requests.

  3. #3

    Default

    Paypal does have a slight risk of liability if you collect donations for a specific cause and then don't use the money for that purpose. I don't know if it is a legal liability or not, but it sure does make them look bad when CNN reports that a crowdfunding campaign that used Paypal as the custodian of the deposits ended up being a scam. If Paypal withheld the funds without legal cause, then I would ask an attorney what my options were. However, if they did, there's really nothing you can do about it.

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