PayPal Will Soon Stop Protecting You From Bad Crowdfunding Projects

PayPal Will Soon Stop Protecting You From Bad Crowdfunding Projects

It’s a well established fact that backing a crowdfunded campaign is like playing with fire. Unfortunately for backers everywhere, however, there’s yet another roadblock in the way of getting that cash back: PayPal is taking away its purchase protection for crowdfunded payments.

The company made note of the new policy in a post outlining updates to its list of “ineligible items”. Other things no longer under PayPal protection include items “purchased from or an amount paid to a government agency” and gambling.

PayPal said that the new rules would go into effect on June 25 but didn’t go into much detail beyond that. When asked for more information, a PayPal spokesperson emailed us the following statement:

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.

It’s worth noting that not all crowdfunding platforms have PayPal integration. Kickstarter, for example, only accepts credit card payments for backing, and GoFundMe uses WePay and Stripe. But Indiegogo has bragged before that its “flexible funding” campaigns have upped the number of contributions. (In an email, a spokesperson for GoFundMe declined to comment on the update.)

Still, PayPal is pretty unequivocal about its position: crowdfunding is risky as hell, and it doesn’t want to be liable for the decisions any more. Given that even Kickstarter knows crowdfunding sometimes doesn’t work out, it makes sense that PayPal has finally caught up.

We’ve reached out to Kickstarter and Indiegogo for comment, but had not heard back at time of writing.


Image via AP