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PayPal Stops Protecting Users Backing Crowdfunding Campaigns


PayPal will stop to provide its renowned protection to customers using their virtual wallets to fund crowdfunding campaigns. This means that those who back unsuccessful projects cannot, since last June 25th, continue to count on PayPal's support to protect their investments.

It is well known that the participation in such campaigns has some inherent risk. Currently, there are several reports of failed projects, and discontent generated by them. Kickstarter itself, which takes no responsibility whatsoever for unsuccessful campaigns, prevents its users with a study that provides some data to consider: 9% of projects fail to deliver the promised rewards; campaigns that meet less than $1,000 in funding are more likely to fail; only 65% of surveyed users received their orders on time.

This new approach by PayPal also represents a degree of standardization in its response, as the company stated:

"[...] we exclude payments to crowdfunding campaigns of our consumer protection program. This is consistent with the risks and uncertainties surrounding the contribution to crowdfunding campaigns, which do not guarantee return on the investment made on them. We work with our crowdfunding partners to encourage fundraisers to clearly highlight the risks involved in investing in their
campaigns."

Thus, from June 25th onward, no customer using a PayPal virtual wallet can count on the company to enforce the rights recognized in their purchase protection programs, which include issues such as delays in deliveries, defective products, or refunds for deliveries that do not happen at all.

Before that date, payments made through this electronic system ended up relying on additional protection, as the company tried to follow a retention policy on the received amounts, until the addressee delivered the product to the customer. If the delivery was not made, then the money would be returned and, even in cases where PayPal failed to make that retention, the company often ensured some kind of "reward".

In the past, the company that revolutionized online payments had already declared to not have any responsibility for complications involving payments on the Kickstarter platform. Now, it sets the same policy for all EU funding platforms.

Now,
other than crowdfunding campaigns, PayPal will also not provide support to "any purchase or payment made to government agencies", as well as "betting or other activities that require a security deposit and a prize".