Backing projects on crowdfunding sites, such as Gofundme and IndieGoGo, is about to become a whole lot more riskier. PayPal, the online payment giant, is terminating Purchase Protection for crowdfunding projects from June 25th onwards, via a user agreement change.
That’s right, from the 25th of June onwards, you’ll be backing dubious projects at your own risk; if they fall through and don’t deliver on their end, you won’t get your money back. To be honest I’m surprised it’s taken this long for PayPal to stop including crowdfunded projects in their Purchase Protection agreement, they’re a risky venture. For instance out of all of the projects on Kickstarter a dismal 9% never deliver, and while that may seem small, it can be the case of millions of dollars. For PayPal, that’s a ton in refund processing.
However it should be noted that PayPal never included Kickstarter in their Purchase Protection and as a result the user agreement change will mostly affect IndieGoGo and some other sites.
“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.”
– Statement from PayPal.
Source: PayPal
