PayPal dropping protection for payments on crowdfunding projects

10 May 2016

PayPal’s full suite of protection for users making purchases through its platform will no longer be available to those spending their money on crowdfunding campaigns.

Starting on 25 June, those using PayPal to support a crowdfunding campaign should maybe think again, as its purchase protection plan is being restricted from that date.

Under PayPal’s purchase protection, users can dispute a transaction if a product doesn’t arrive, or is the wrong item. It’s essentially a wonderful way to encourage people to purchase online.

However, crowdfunding – which is a cluster of risk and reward, anyway – will not be supported in this way, with PayPal saying it is “consistent with the risks” that everybody should understand when contributing across these platforms.

“We work with our crowdfunding platform partners to encourage fundraisers to communicate the risks involved in investing in their campaign to donors,” it said in a statement to TechCrunch.

The risks with crowdfunding are numerous, with Zano perhaps the greatest example of just how wrong campaigns can actually go.

Other areas not covered by purchase protection come the 25 June deadline will include anything purchased from, or an amount paid to, a government agency, as well as gambling, gaming and/or any other activity with an entry fee and a prize.

PayPal image via Shutterstock

Gordon Hunt was a journalist with Silicon Republic