Paypal will no longer protect your crowdfunding payments

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**Mr. Burning**

Dont know if anyone else has seen this.

http://www.wired.co.uk/news/archive/2016-05/09/paypal-ends-crowdfunding-payment-protection

PayPal will be removing protection for purchases made on crowdfunding sites, such as Kickstarter or Indiegogo, effective from next month.

Currently, PayPal's purchase protection provides some security to customers, offering a reimbursement of funds if a seller doesn't deliver items or orders go wrong. In the case of crowdfunding, something going wrong is a high risk as the sites aren't ways for consumers to pre-order products, they're essentially investment portals. You have no guarantee you'll actually receive what you've backed, and it's this grey area PayPal is trying to cover itself from.

"In Australia, Brazil, Canada, Japan, United States and other countries, we have excluded payments made to crowdfunding campaigns from our buyer protection programs," PayPal wrote in a statement sent to TechCrunch.

"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."

Although the UK isn't specifically mentioned in PayPal's statement, the company said the change in policy will apply to all users when it comes into force on June 25.

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But the change in policy hasn't been formally announced so much as snuck out. As part of the latest update to PayPal's user agreement, the provider simply added: "We're updating the list of items that are not eligible for Purchase Protection." In addition to removing "Payments on crowdfunding platforms" from the list of protected purchases, buyers will no longer be covered for "anything purchased from or an amount paid to a government agency" or "gambling, gaming and/or any other activity with an entry fee and a prize". PayPal is also "clarifying the exclusion for items equivalent to cash to now include stored value items such as gift cards and pre-paid cards."

The big problem with PayPal removing purchase protection from crowdfunding payments is that, in a huge number of cases, PayPal is processing those payments to campaign organisers in the first place. Although Kickstarter in particular doesn't accept direct PayPal payments, many organisers allow 'slacker backers' to pledge independently after a campaign has ended, often using PayPal. Others, notably IndieGogo, use PayPal directly.

In 2014 PayPal had to revise its stance on the project funding model after facing criticism for freezing funds from several campaigns. This followed the payment platform's separation from eBay, making the once-entwined businesses separate companies. Since then, PayPal has allowed US-based gambling sites to use it as a payment platform, after previously banning such sites for more than a decade.

Going forwards, direct payment on credit cards when backing the next crowdfunded project to catch your may provide some protection (depending on your card providers' own terms and conditions) but the PayPal safety net looks to have been cut permanently.

Does anyone use PP over Credit or debit card for KS?

**jreilly89**

Currently, no, but I knew it was an option. Besides, I though KS covered your money, not PP. Or is it just back at your own risk?

**nkelsch**

This is for people who pledge 1$, add stuff in the pledge manager via Paypal... Never get anything and then try to refund money via Paypal claim.

I would say most KS I back now, I have to send SOME money post-KS via paypal either for add-ons or shipping.

All Paypal is doing is saying 'if this is crowdfunding related, then your money is goooooooooooooooooooone'.

**Dark Severance**

This is most likely because there isn't a hard-set delivery time, which means someone could dispute something a couple years later. Most things have a X amount of days of purchase. If it is a pre-order item, it is based on X days from the time of promised delivery. Crowdfunding doesn't have a promised delivery date, it has a estimated date.

In most cases as long as they show they are "attempting to deliver" through updates, I can't usually contest it with a credit card as "non-delivered goods". Last time I had to do that, I had to show time stamps for promised delivery, then show a period of inactivity and no updates.

It also interferes with the automated part of handling disputes. This requires someone to actually really pay attention to the dispute, which probably costs Paypal more than they would like. Since I have known quite a few people who after a year, because they needed funds for something else, just claim they didn't get goods even though it isn't time to deliver. This puts a strain on their process.

Honestly though it still won't effect me with Indiegogo. Any paypal purchase I do make is using my credit card/bank with paypal. Any dispute I just go directly to my credit card/bank because it is a much easier process. There also isn't a long delay to return funds to me and I don't get hit with another fee.

**notprop**

Doent apply in the Uk......yet.

**Azreal13**

jreilly89 wrote:
Currently, no, but I knew it was an option. Besides, I though KS covered your money, not PP. Or is it just back at your own risk?

This is the sort of misconception that generates unhappy KS backers.

KS doesn't protect your money. Your money is not protected, like any other investment the value can go up or down. Down can mean completely to 0.

Don't back any more than you can afford to lose and Kickstarting is a lot less stressful.

Automatically Appended Next Post:

notprop wrote:
Doent apply in the Uk......yet.

Doesn't apply anywhere yet, but it will cover the UK when it comes into effect, says right there in the article.

**notprop**

I went by the BBC article that says it doesn't.

http://www.bbc.co.uk/news/technology-36247309

**hotsauceman1**

Im fine with this. Kickstarter isnt meant to be a preorder service, and that is how people see it. Its kinda stupid.

**jreilly89**

hotsauceman1 wrote:
Im fine with this. Kickstarter isnt meant to be a preorder service, and that is how people see it. Its kinda stupid.

So...people should be able to do whatever they want with KS? The intent is that it's not a pre-order, but there's an unspoken agreement that the guy you're KSing should deliver on SOMETHING.

**Monkey Tamer**

I see KS as small time venture capitalism. Instead of shares in a growing company you get a product instead. I don't invest in risky growing companies. I invest in established corporations that pay dividends. I don't make a lot, but the risk is far less with a guaranteed payoff every quarter. I don't like the idea of having nothing to show for my money, or a substandard product, so I rarely even look at kickstarters for anything.

**TheWaspinator**

Actually, there have been court rulings about Kickstarter that DO consider it a store and that consumer protection law applies.

http://www.atg.wa.gov/news/news-releases/ag-makes-crowdfunded-company-pay-shady-deal

**455_PWR**

The problem is the timeline. I pledged on heroquest 25th, robotech rpg tactics, and dust tactics: Babylon, and haven't seen anything from heroquest or half my product from dust or robotech. I figured I'd have a good shot at getting my dust or robotech money back as the items I am missing are extra add ons, which are purchased like an online store.

However, it is now years later, so credit card fraud claims won't handle them. Consumer protection has term limits. Sad to see known companies like gamezone, palladium, and dust studios take advantage of the consumer base for profit and not deliver. Most of those companies could have easily made new product without kickstarter too, so it was all about getting rich quick and not feeling like they have to deliver.

Oh, and did I just see the new Babylon premium minis I had ordered and never got being sold on dustgame.com??? WTF

:(

**Monkey Tamer**

Create any system and someone will find a way to unscrupulously milk it.

**Fenrir Kitsune**

455_PWR wrote:
The problem is the timeline. I pledged on heroquest 25th, robotech rpg tactics, and dust tactics: Babylon, and haven't seen anything from heroquest or half my product from dust or robotech. I figured I'd have a good shot at getting my dust or robotech money back as the items I am missing are extra add ons, which are purchased like an online store.

However, it is now years later, so credit card fraud claims won't handle them. Consumer protection has term limits. Sad to see known companies like gamezone, palladium, and dust studios take advantage of the consumer base for profit and not deliver. Most of those companies could have easily made new product without kickstarter too, so it was all about getting rich quick and not feeling like they have to deliver.

Oh, and did I just see the new Babylon premium minis I had ordered and never got being sold on dustgame.com??? WTF

:(

Did you not consider any of this prior to putting money down? It's not a preorder system, it's a gamble with funds. Dust had warning lights all over it before it opened!

**Dark Severance**

455_PWR wrote:
However, it is now years later, so credit card fraud claims won't handle them. Consumer protection has term limits.

Look at getting a new credit card company? I've had no issues with my credit card company for something I Kickstarted 2 years ago but has failed to deliver.

**carmachu**

I learned my lesson long long ago- back Nicholas Louge's Razor coast long before kickstarter was used. Granted I eventually got my money back and the product eventually got made, but It made me make a promise no more. If the product isnt available, you dont get my money. No more funding stuff thats not even being made.;

**Crimson Devil**

The thing is, it is very difficult to bring new products to market. Even established companies can screw it up. The kind of problems you encounter are generally hidden from the public because they happen before the potential customers are even aware of the product. With Kickstarter the issues are more visible. Customers will never know you missed your original deadline by a year and half to get it on the store shelf. Unless you Kickstarted it.

Add in the unrealistic demands of your backers and it can get tense quickly. Every KS has a handful of special snow flakes gumming up the works and demanding time and energy better used else where on your project. Or demanding your head if there any delays.

Kickstarters are risky. Never back a project with more money than you are willing to lose. If you can't handle that, then don't back anything.

**Psienesis**

jreilly89 wrote:
hotsauceman1 wrote:
Im fine with this. Kickstarter isnt meant to be a preorder service, and that is how people see it. Its kinda stupid.

So...people should be able to do whatever they want with KS? The intent is that it's not a pre-order, but there's an unspoken agreement that the guy you're KSing should deliver on SOMETHING.

No, no there isn't. When you back a KS, you're investing in a project. That project might never be realized. It's the same as investing in the stock market. Sometimes, the stock market takes a dive and everything you invested goes up in smoke. Those shares you bought for $50 a pop may never again rise above $1 in value. That's the risk of investing.