PayPal pulls backing for crowdfunding
PayPal has revealed that it will cease payment protection for crowdfunding purchases from June.
Right now, you can back many crowdfunded projects using your PayPal account, and take advantage of the online payment service’s Purchase Protection should that project go belly up.
It seems the latter scenario has simply become too common for PayPal’s liking. Over on its website, the company has outlined a forthcoming policy update that will remove this handy safety net when backing a new product or company.
From June 26, Section 13.3 of PayPal’s policy will be adding “Payments on crowdfunding platforms” to the list of exceptions for the Purchase Protection scheme.
PayPal told TechCrunch that “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.”
It’s an understandable move, given the increasing number of failed and outright deceptive crowdfunding schemes out there.
In a Kickstarter report published last year, it emerged that nine percent of all Kickstarter projects fail to deliver rewards to their backers.
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Additionally, Purchase Protection will no longer cover “Anything purchased from or an amount paid to a government agency,” and “Gambling, gaming and/or any other activity with an entry fee and a prize.”
It should be noted that PayPal only specifies “Australia, Brazil, Canada, Japan, United States and other countries” for this change in policy, and there’s no mention of an impending change on the related UK website. Of course, this doesn’t mean that such an amendment isn’t pending.
Would such a move prevent you from backing future crowdfunding schemes? Let us know in the comments.