PayPal To No Longer Cover Crowdfunding Projects That Don’t Fulfill

By Polar_Bear
In Crowdfunding
May 12th, 2016
6 Comments
1663 Views
PayPal

So, this isn’t specifically a story about gaming, but much like the dock workers strike last year, it will have a major impact on gaming (possibly much more so). PayPal is amending their User Agreement to no longer cover refunds in case a Crowdfunding campaign (I.E. – Kickstarter and Indiegogo) fails to deliver their products. This change will go into effect on June 25th.

From PayPal’s policy update:

SECTION 13.3 Ineligible Items

We’re updating the list of items that are not eligible for Purchase Protection. The new items that will not be eligible are:

Payments on crowdfunding platforms (emphasis mine)
Anything purchased from or an amount paid to a government agency
Gambling, gaming and/or any other activity with an entry fee and a prize

We’re also clarifying the exclusion for items equivalent to cash to now include stored value items such as gift cards and pre-paid cards.

When further asked about the change in policy, PayPal said, “In Australia, Brazil, Canada, Japan, United States and certain other countries, we have excluded payments made to crowdfunding campaigns from our buyer protection programs. This is consistent with the risks and uncertainties involved in contributing to crowdfunding campaigns, which do not guarantee a return for the investment made in these types of campaigns. We work with our crowdfunding platform partners to encourage fundraisers to communicate the risks involved in investing in their campaign to donors.”

How will this change your personal crowdfunding policy towards what you will and won’t back?

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  • Ian Hunter

    It will not change mine and I can see why PayPal is trying to distance themselves from the inherent risk of KickStarter. It is not like KickStarter itself is doing anything about fraudulent KickStarters that appear on their site as is.

  • Robert Armstrong

    But Kickstarter don’t take PayPal….. yet …

    https://www.kickstarter.com/help/faq/backer+questions

    “Can I pledge with Paypal?

    We support most major credit cards, but we do not support payment with Paypal at this time.”

    I’ve heard various reasons why they don’t accept PayPal (among them a suggestion it was the Paypal refunds system they didn’t like, so who knows, that may change now) – but I have no idea what their actual reasons are, it’s just been really annoying wanting to back things using Paypal and not being able to…..

    • Not directly, no. But there are many Kickstarter campaigns that will take PayPal payments after a campaign ends, during the Pledge Manager phase of things. And I’ve seen various ones that will take PayPal payments while the campaign’s still running, just through their own webstore.

      • Robert Armstrong

        My feeling is those are distinct payment methods though – paying directly to a company website is not the same as paying into the Kickstarter, even though all the funds may end up being used for the same overall end, the transaction through the website isn’t subject to quite the same conditions as the ones through Kickstarter – and similarly, payments after campaigns end are direct payments to the campaign manager, not via Kickstarter.

        I’m not at all sure to what extent the Paypal ‘cover’ has actually been a big influence on people deciding to fund things, it’s certainly never been part of my calculations – we’ll just have to wait and see if it makes any significant difference in future. Kickstarter beginning to accept Paypal, though – I think would be a bigger impact, if it happens.

        • PRAY FOR MOJO

          That’s probably why they made the policy change: it reduces Kickstarter’s fear of accepting PayPal. If PayPal doesn’t grant refunds to individuals participating in crowd-funding, that means Kickstarter doesn’t have to handle disputes from PayPal.

      • PayPal can be used on KickStarter in the form of their credit or debit cards. PayPal’s new policy regarding not covering KickStarter via their buyer protection policy means these two types of payments.