Last year, PayPal promised to overhaul its policies after getting flak for freezing huge amounts of crowdfunding funds, and today it's announced those changes. By the looks of it, PayPal has been working closely with crowdfunding websites to verify each campaign that wants to use its services. If it determines that a campaign is a true crowdfunding project (as opposed to a pre-order vehicle) with no guarantees of a final product, PayPal requires it to plaster a disclaimer on its campaign page. Owners have to explicitly state that backers may not get their rewards in the end if they don't want PayPal to get on their case. That's not all, though: in some cases, it will require owners to disclose personal info or submit copies of their TIN/SS numbers and government IDs for verification.
PayPal chief risk officer Tomer Barel explained that the company had issues with crowdfunding, because many websites allow owners to pull funds before they reach their final goal. "This can cause regulatory and risk issues," Barel wrote, or in other words: the company doesn't want to deal with upset customers in case a campaign turns out to be a scam or if it fails to develop a final product. While some people might find PayPal's conditions a bit too stringent, this development does come with a nice plus: the company now recognizes charity drives (even personal ones) as crowdfunding projects.
[Image credit: Steve Ganz/Flickr]