No More Paypal Payment Protection for Crowdfunding Pledges

[ffronw]

No More Paypal Payment Protection for Crowdfunding Pledges

//cdn.themis-media.com/media/global/images/library/deriv/1320/1320538.jpgPaypal will no longer cover crowdfunding pledges under its payment protection plan.

If you've been using Paypal for your pledges on Kickstarter, Fig, or any other crowdfunding platform, there are some changes coming in June that you should know about. As of June 25, the company will no longer cover crowdfunding pledges under their payment protection plan, which allowed users to recover the money pledged if the project did not deliver.

The changes were announced in a post [https://www.paypal.com/us/webapps/mpp/ua/upcoming-policies-full] on the Paypal company blog. In a statement, the company said of the changes, "In Australia, Brazil, Canada, Japan, United States and 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." Note that these changes will not affect users in the UK.

Paypal also said [http://www.cnbc.com/2016/05/09/paypal-pulls-buyer-protection-for-crowdfunding-sites.html] that while a user can still file a dispute to try and recover funds from the seller, "PayPal will generally not find in your favor if you escalate a dispute to a claim for an item which is not eligible for PayPal Purchase Protection"

This change means that there's one less way for burned crowdfunders to recover the money they lost in a failed project. Crowdfunding is inherently risky, which is why Paypal made this move. It only underscores the need for diligence from backers before they part with their money.

Permalink

 

[Saelune]

Well, I think Crowdfunding in general needs an overhaul in how they work. I am in favor of it overall, but cancelled/unfinished projects should return the money.

I also think overfunded projects shouldn't be punished for getting a lot of money though either. If you need 100,000 for your game, and get 1 mill, good for you, but worry on delivering that 100,000 worth finished project, then worry about padding it out or improving it. Maybe give backers the game for free, but otherwise, lucky you.

 

[lacktheknack]

Well, I think Crowdfunding in general needs an overhaul in how they work. I am in favor of it overall, but cancelled/unfinished projects should return the money.

They don't have it anymore. How much blood can you get out of a rock?

 

[Saelune]

Well, I think Crowdfunding in general needs an overhaul in how they work. I am in favor of it overall, but cancelled/unfinished projects should return the money.

They don't have it anymore. How much blood can you get out of a rock?

Like I said, a lot of reworking needs to be done. Perhaps money shouldn't be given to them until the goal is reached. Then its the project's responsibility to be finished. If you cant pay it back, then don't just cancel it. If this means they have to pay back backers with their own money, that's on them, now isn't it? I don't think backers are the only ones who should be worried about risks from crowdfunding.

 

[kekkres]

Well, I think Crowdfunding in general needs an overhaul in how they work. I am in favor of it overall, but cancelled/unfinished projects should return the money.

They don't have it anymore. How much blood can you get out of a rock?

Like I said, a lot of reworking needs to be done. Perhaps money shouldn't be given to them until the goal is reached. Then its the project's responsibility to be finished. If you cant pay it back, then don't just cancel it. If this means they have to pay back backers with their own money, that's on them, now isn't it? I don't think backers are the only ones who should be worried about risks from crowdfunding.

Projects fail all the time, Investors lose money into the eather all the time. And as the other guy said, Projects fail when the money is gone. You cant refund hundreds of thousands of dollars when your broke, so the only way such a protection could work is if some sort of third party insurance was added, which would make everything way more expensive for all involved.

 

[L34dP1LL]

Well, I think Crowdfunding in general needs an overhaul in how they work. I am in favor of it overall, but cancelled/unfinished projects should return the money.

They don't have it anymore. How much blood can you get out of a rock?

Like I said, a lot of reworking needs to be done. Perhaps money shouldn't be given to them until the goal is reached. Then its the project's responsibility to be finished. If you cant pay it back, then don't just cancel it. If this means they have to pay back backers with their own money, that's on them, now isn't it? I don't think backers are the only ones who should be worried about risks from crowdfunding.

But they need the money to continue the proyect. You're making a catch 22

 

[Ukomba]

That's quite a tongue twister of a title. PayPal Payment Protection Pledges.

 

[TheMysteriousGX]

Well, there does need to be an overhaul, though I think it needs to be the backer's expectations that need overhauling.

I mean, scams are one thing, but if a group made a good faith effort and the project just fails? That's life. Complain about it, sure, but expecting to get paid back by the people who needed to crowdfunding in the first place?

There's only so much getting a second job can do, you know? This isn't a loan, it isn't an investment, it's crowdfunding to have something made that you want to exist. The best attitude to have while crowdfunding is to think of it as setting fire to your money in the hopes that your sacrifice pleases the Old Ones and you get something in return. Don't kill the well meaning priest when the sacrifice fails, but be vigilant for the charlatan.

 

[Saelune]

Well, I think Crowdfunding in general needs an overhaul in how they work. I am in favor of it overall, but cancelled/unfinished projects should return the money.

They don't have it anymore. How much blood can you get out of a rock?

Like I said, a lot of reworking needs to be done. Perhaps money shouldn't be given to them until the goal is reached. Then its the project's responsibility to be finished. If you cant pay it back, then don't just cancel it. If this means they have to pay back backers with their own money, that's on them, now isn't it? I don't think backers are the only ones who should be worried about risks from crowdfunding.

But they need the money to continue the proyect. You're making a catch 22

Like I said, I don't think they should get the money until they meet their backing goal, so if they mathed it right, shouldn't need more money. I don't think they should get anything until then. If you paid for a service, and they don't do it, you wouldn't want to still pay them, would you?

 

[Worgen]

Well, I think Crowdfunding in general needs an overhaul in how they work. I am in favor of it overall, but cancelled/unfinished projects should return the money.

They don't have it anymore. How much blood can you get out of a rock?

Like I said, a lot of reworking needs to be done. Perhaps money shouldn't be given to them until the goal is reached. Then its the project's responsibility to be finished. If you cant pay it back, then don't just cancel it. If this means they have to pay back backers with their own money, that's on them, now isn't it? I don't think backers are the only ones who should be worried about risks from crowdfunding.

But they need the money to continue the proyect. You're making a catch 22

Like I said, I don't think they should get the money until they meet their backing goal, so if they mathed it right, shouldn't need more money. I don't think they should get anything until then. If you paid for a service, and they don't do it, you wouldn't want to still pay them, would you?

Yeah, they dont get the money unless the funding goal is met, at least through all the ones I know of. I think the change here is that after the project has taken the money, some still fail to deliver and that is the change that paypal is making, they are specifically saying that money is gone, you cant try and get it back.

 

[Saelune]

Well, I think Crowdfunding in general needs an overhaul in how they work. I am in favor of it overall, but cancelled/unfinished projects should return the money.

They don't have it anymore. How much blood can you get out of a rock?

Like I said, a lot of reworking needs to be done. Perhaps money shouldn't be given to them until the goal is reached. Then its the project's responsibility to be finished. If you cant pay it back, then don't just cancel it. If this means they have to pay back backers with their own money, that's on them, now isn't it? I don't think backers are the only ones who should be worried about risks from crowdfunding.

But they need the money to continue the proyect. You're making a catch 22

Like I said, I don't think they should get the money until they meet their backing goal, so if they mathed it right, shouldn't need more money. I don't think they should get anything until then. If you paid for a service, and they don't do it, you wouldn't want to still pay them, would you?

Yeah, they dont get the money unless the funding goal is met, at least through all the ones I know of. I think the change here is that after the project has taken the money, some still fail to deliver and that is the change that paypal is making, they are specifically saying that money is gone, you cant try and get it back.

Depending on the project, people should still get something back atleast.

 

[Saelune]

Well, I think Crowdfunding in general needs an overhaul in how they work. I am in favor of it overall, but cancelled/unfinished projects should return the money.

They don't have it anymore. How much blood can you get out of a rock?

Like I said, a lot of reworking needs to be done. Perhaps money shouldn't be given to them until the goal is reached. Then its the project's responsibility to be finished. If you cant pay it back, then don't just cancel it. If this means they have to pay back backers with their own money, that's on them, now isn't it? I don't think backers are the only ones who should be worried about risks from crowdfunding.

But they need the money to continue the proyect. You're making a catch 22

Like I said, I don't think they should get the money until they meet their backing goal, so if they mathed it right, shouldn't need more money. I don't think they should get anything until then. If you paid for a service, and they don't do it, you wouldn't want to still pay them, would you?

Websites like Kickstarter don't give anything unless the first goal for the project is accomplished. Literally your exact suggestion.

Other than that, you seem to be saying "if a project falls through, the people should be dragged through financial hell".

When you fund a project. You are giving the person charity (in some sense). Its usually not their fault if a project fails.

If you want charity, start one. These people could just invest their own money from the start if they don't want to deal with other people, but they are taking other people's money and that makes it a big deal. A lot of you guys seem to see me as attacking the projects, but I think of it as defending the backers, atleast partially. Maybe you wont get a full refund, and there are tons of variables to take into account with each backer and project, but when you take someone's money and promise something, you need to accept the responsibilities that atleast in my opinion, should come with that.

 

[Worgen]

Well, I think Crowdfunding in general needs an overhaul in how they work. I am in favor of it overall, but cancelled/unfinished projects should return the money.

They don't have it anymore. How much blood can you get out of a rock?

Like I said, a lot of reworking needs to be done. Perhaps money shouldn't be given to them until the goal is reached. Then its the project's responsibility to be finished. If you cant pay it back, then don't just cancel it. If this means they have to pay back backers with their own money, that's on them, now isn't it? I don't think backers are the only ones who should be worried about risks from crowdfunding.

But they need the money to continue the proyect. You're making a catch 22

Like I said, I don't think they should get the money until they meet their backing goal, so if they mathed it right, shouldn't need more money. I don't think they should get anything until then. If you paid for a service, and they don't do it, you wouldn't want to still pay them, would you?

Yeah, they dont get the money unless the funding goal is met, at least through all the ones I know of. I think the change here is that after the project has taken the money, some still fail to deliver and that is the change that paypal is making, they are specifically saying that money is gone, you cant try and get it back.

Depending on the project, people should still get something back atleast.

I agree in principle, but unless the project literally took the money and ran. Its probably all gone. If you put money in the stock market and the value of your stocks tanks, you dont get anything back either.

 

[Saelune]

Well, I think Crowdfunding in general needs an overhaul in how they work. I am in favor of it overall, but cancelled/unfinished projects should return the money.

They don't have it anymore. How much blood can you get out of a rock?

Like I said, a lot of reworking needs to be done. Perhaps money shouldn't be given to them until the goal is reached. Then its the project's responsibility to be finished. If you cant pay it back, then don't just cancel it. If this means they have to pay back backers with their own money, that's on them, now isn't it? I don't think backers are the only ones who should be worried about risks from crowdfunding.

But they need the money to continue the proyect. You're making a catch 22

Like I said, I don't think they should get the money until they meet their backing goal, so if they mathed it right, shouldn't need more money. I don't think they should get anything until then. If you paid for a service, and they don't do it, you wouldn't want to still pay them, would you?

Yeah, they dont get the money unless the funding goal is met, at least through all the ones I know of. I think the change here is that after the project has taken the money, some still fail to deliver and that is the change that paypal is making, they are specifically saying that money is gone, you cant try and get it back.

Depending on the project, people should still get something back atleast.

I agree in principle, but unless the project literally took the money and ran. Its probably all gone. If you put money in the stock market and the value of your stocks tanks, you dont get anything back either.

Well, why is the money gone? If nothing else some communication would be nice. Explain why you need x amount of money, and if you get that much and its still not enough, why? Why did it fail? Does it have to fail or are you just not trying hard enough? Just being clear can be a big help.

 

[Worgen]

Well, I think Crowdfunding in general needs an overhaul in how they work. I am in favor of it overall, but cancelled/unfinished projects should return the money.

They don't have it anymore. How much blood can you get out of a rock?

Like I said, a lot of reworking needs to be done. Perhaps money shouldn't be given to them until the goal is reached. Then its the project's responsibility to be finished. If you cant pay it back, then don't just cancel it. If this means they have to pay back backers with their own money, that's on them, now isn't it? I don't think backers are the only ones who should be worried about risks from crowdfunding.

But they need the money to continue the proyect. You're making a catch 22

Like I said, I don't think they should get the money until they meet their backing goal, so if they mathed it right, shouldn't need more money. I don't think they should get anything until then. If you paid for a service, and they don't do it, you wouldn't want to still pay them, would you?

Yeah, they dont get the money unless the funding goal is met, at least through all the ones I know of. I think the change here is that after the project has taken the money, some still fail to deliver and that is the change that paypal is making, they are specifically saying that money is gone, you cant try and get it back.

Depending on the project, people should still get something back atleast.

I agree in principle, but unless the project literally took the money and ran. Its probably all gone. If you put money in the stock market and the value of your stocks tanks, you dont get anything back either.

Well, why is the money gone? If nothing else some communication would be nice. Explain why you need x amount of money, and if you get that much and its still not enough, why? Why did it fail? Does it have to fail or are you just not trying hard enough? Just being clear can be a big help.

Because the moneys been spent. Crowdfunding is about funding the development of something, sometimes it will end up in early access or something for sale, but sometimes it will turn out not to be enough and all the money will be gone.

 

[MoltenSilver]

Well, I think Crowdfunding in general needs an overhaul in how they work. I am in favor of it overall, but cancelled/unfinished projects should return the money.

They don't have it anymore. How much blood can you get out of a rock?

Like I said, a lot of reworking needs to be done. Perhaps money shouldn't be given to them until the goal is reached. Then its the project's responsibility to be finished. If you cant pay it back, then don't just cancel it. If this means they have to pay back backers with their own money, that's on them, now isn't it? I don't think backers are the only ones who should be worried about risks from crowdfunding.

But they need the money to continue the proyect. You're making a catch 22

Like I said, I don't think they should get the money until they meet their backing goal, so if they mathed it right, shouldn't need more money. I don't think they should get anything until then. If you paid for a service, and they don't do it, you wouldn't want to still pay them, would you?

Yeah, they dont get the money unless the funding goal is met, at least through all the ones I know of. I think the change here is that after the project has taken the money, some still fail to deliver and that is the change that paypal is making, they are specifically saying that money is gone, you cant try and get it back.

Depending on the project, people should still get something back atleast.

I agree in principle, but unless the project literally took the money and ran. Its probably all gone. If you put money in the stock market and the value of your stocks tanks, you dont get anything back either.

Well, why is the money gone? If nothing else some communication would be nice. Explain why you need x amount of money, and if you get that much and its still not enough, why? Why did it fail? Does it have to fail or are you just not trying hard enough? Just being clear can be a big help.

I think you're vastly overestimating the amount of control most of these developers have; sure most developers should set the goal somewhat over what they really need as an emergency fund, but there are so many outside factors that can destroy even a cautious-within-all-reason budget such as: lawyer costs if the developer gets embroiled in a big lawsuit, something that delays production (office building being destroyed in a fire for example; either you keep paying the team while not working or dismiss them all and have to go through re-hiring, neither of which is inexpensive), a personal crisis of a crucial member of the team that forces them to abandon or delay the project, the reasons go on endlessly. And all of this is further exacerbated by the Kickstarter model forcing the developer to set the goal as low as possible due to it being 'all or nothing' collection model.

As has been pointed out above,
Crowdfunding isn't a store,
Crowdfunding isn't an investment,
Unless there's outright fraud involved the money has been spent; salaries, development tools (both software and hardware), office rent, community managers, all of these are expenses you can't exactly 'take back' when the project crashes. The only sell-able assets are maybe the IP and current state of the project, which likely no one wants to buy.

While there's an argument to be made that Kickstarter/its clients aren't taken to task enough for trying to make their projects seem like a store to bring in money it isn't like that fact is deeply buried or actively hidden. Kickstarter is money shoveled into a fire in the hopes the ashes are something worthwhile.

 

[Saelune]

Well, I think Crowdfunding in general needs an overhaul in how they work. I am in favor of it overall, but cancelled/unfinished projects should return the money.

They don't have it anymore. How much blood can you get out of a rock?

Like I said, a lot of reworking needs to be done. Perhaps money shouldn't be given to them until the goal is reached. Then its the project's responsibility to be finished. If you cant pay it back, then don't just cancel it. If this means they have to pay back backers with their own money, that's on them, now isn't it? I don't think backers are the only ones who should be worried about risks from crowdfunding.

But they need the money to continue the proyect. You're making a catch 22

Like I said, I don't think they should get the money until they meet their backing goal, so if they mathed it right, shouldn't need more money. I don't think they should get anything until then. If you paid for a service, and they don't do it, you wouldn't want to still pay them, would you?

Yeah, they dont get the money unless the funding goal is met, at least through all the ones I know of. I think the change here is that after the project has taken the money, some still fail to deliver and that is the change that paypal is making, they are specifically saying that money is gone, you cant try and get it back.

Depending on the project, people should still get something back atleast.

I agree in principle, but unless the project literally took the money and ran. Its probably all gone. If you put money in the stock market and the value of your stocks tanks, you dont get anything back either.

Well, why is the money gone? If nothing else some communication would be nice. Explain why you need x amount of money, and if you get that much and its still not enough, why? Why did it fail? Does it have to fail or are you just not trying hard enough? Just being clear can be a big help.

Because the moneys been spent. Crowdfunding is about funding the development of something, sometimes it will end up in early access or something for sale, but sometimes it will turn out not to be enough and all the money will be gone.

Was semi-rhetorical. Did they waste money on frivolous things? Did they blow it all on graphic fidelity when they should have spread it out better, did they use the money to pay for expensive lunches and not the project? The backers essentially become their publisher, so I think "its gone" is not a good enough answer.

 

[Saelune]

Well, I think Crowdfunding in general needs an overhaul in how they work. I am in favor of it overall, but cancelled/unfinished projects should return the money.

They don't have it anymore. How much blood can you get out of a rock?

Like I said, a lot of reworking needs to be done. Perhaps money shouldn't be given to them until the goal is reached. Then its the project's responsibility to be finished. If you cant pay it back, then don't just cancel it. If this means they have to pay back backers with their own money, that's on them, now isn't it? I don't think backers are the only ones who should be worried about risks from crowdfunding.

But they need the money to continue the proyect. You're making a catch 22

Like I said, I don't think they should get the money until they meet their backing goal, so if they mathed it right, shouldn't need more money. I don't think they should get anything until then. If you paid for a service, and they don't do it, you wouldn't want to still pay them, would you?

Yeah, they dont get the money unless the funding goal is met, at least through all the ones I know of. I think the change here is that after the project has taken the money, some still fail to deliver and that is the change that paypal is making, they are specifically saying that money is gone, you cant try and get it back.

Depending on the project, people should still get something back atleast.

I agree in principle, but unless the project literally took the money and ran. Its probably all gone. If you put money in the stock market and the value of your stocks tanks, you dont get anything back either.

Well, why is the money gone? If nothing else some communication would be nice. Explain why you need x amount of money, and if you get that much and its still not enough, why? Why did it fail? Does it have to fail or are you just not trying hard enough? Just being clear can be a big help.

I think you're vastly overestimating the amount of control most of these developers have; sure most developers should set the goal somewhat over what they really need as an emergency fund, but there are so many outside factors that can destroy even a cautious-within-all-reason budget such as: lawyer costs if the developer gets embroiled in a big lawsuit, something that delays production (office building being destroyed in a fire for example; either you keep paying the team while not working or dismiss them all and have to go through re-hiring, neither of which is inexpensive), a personal crisis of a crucial member of the team that forces them to abandon or delay the project, the reasons go on endlessly. And all of this is further exacerbated by the Kickstarter model forcing the developer to set the goal as low as possible due to it being 'all or nothing' collection model.

As has been pointed out above,
Crowdfunding isn't a store,
Crowdfunding isn't an investment,
Unless there's outright fraud involved the money has been spent; Salaries, development tools, community managers, all of these are expenses you can't exactly 'take back' when the project crashes.

While there's an argument to be made that Kickstarter/its clients aren't taken to task enough for trying to make their projects seem like a store to bring in money it isn't like that fact is deeply buried or actively hidden. Kickstarter is money shoveled into a fire in the hopes the ashes are something worthwhile.

I don't think a building fire is the main cause of project failure. I understand context. I'm certainly more lenient on projects that fail cause of something truly out of their control like fires, or some disaster. But I'm betting most failures are due to irresponsibility, either due to poor planning, wasteful spending, or general negligence. If nothing else, if they fail and cant prove its not their fault, then they should have to pay the backers back somehow.

 

[MoltenSilver]

Well, I think Crowdfunding in general needs an overhaul in how they work. I am in favor of it overall, but cancelled/unfinished projects should return the money.

They don't have it anymore. How much blood can you get out of a rock?

Like I said, a lot of reworking needs to be done. Perhaps money shouldn't be given to them until the goal is reached. Then its the project's responsibility to be finished. If you cant pay it back, then don't just cancel it. If this means they have to pay back backers with their own money, that's on them, now isn't it? I don't think backers are the only ones who should be worried about risks from crowdfunding.

But they need the money to continue the proyect. You're making a catch 22

Like I said, I don't think they should get the money until they meet their backing goal, so if they mathed it right, shouldn't need more money. I don't think they should get anything until then. If you paid for a service, and they don't do it, you wouldn't want to still pay them, would you?

Yeah, they dont get the money unless the funding goal is met, at least through all the ones I know of. I think the change here is that after the project has taken the money, some still fail to deliver and that is the change that paypal is making, they are specifically saying that money is gone, you cant try and get it back.

Depending on the project, people should still get something back atleast.

I agree in principle, but unless the project literally took the money and ran. Its probably all gone. If you put money in the stock market and the value of your stocks tanks, you dont get anything back either.

Well, why is the money gone? If nothing else some communication would be nice. Explain why you need x amount of money, and if you get that much and its still not enough, why? Why did it fail? Does it have to fail or are you just not trying hard enough? Just being clear can be a big help.

I think you're vastly overestimating the amount of control most of these developers have; sure most developers should set the goal somewhat over what they really need as an emergency fund, but there are so many outside factors that can destroy even a cautious-within-all-reason budget such as: lawyer costs if the developer gets embroiled in a big lawsuit, something that delays production (office building being destroyed in a fire for example; either you keep paying the team while not working or dismiss them all and have to go through re-hiring, neither of which is inexpensive), a personal crisis of a crucial member of the team that forces them to abandon or delay the project, the reasons go on endlessly. And all of this is further exacerbated by the Kickstarter model forcing the developer to set the goal as low as possible due to it being 'all or nothing' collection model.

As has been pointed out above,
Crowdfunding isn't a store,
Crowdfunding isn't an investment,
Unless there's outright fraud involved the money has been spent; Salaries, development tools, community managers, all of these are expenses you can't exactly 'take back' when the project crashes.

While there's an argument to be made that Kickstarter/its clients aren't taken to task enough for trying to make their projects seem like a store to bring in money it isn't like that fact is deeply buried or actively hidden. Kickstarter is money shoveled into a fire in the hopes the ashes are something worthwhile.

I don't think a building fire is the main cause of project failure. I understand context. I'm certainly more lenient on projects that fail cause of something truly out of their control like fires, or some disaster. But I'm betting most failures are due to irresponsibility, either due to poor planning, wasteful spending, or general negligence. If nothing else, if they fail and cant prove its not their fault, then they should have to pay the backers back somehow.

I was using a building fire as the most extreme example, not a general occurrence (thought I would argue legal costs are a very variable amount that most people would be surprised how much even a 'smooth' project endures, much less a troubled one); the truth is it's usually a death of a thousand cuts. You CANNOT plan for many slight road bumps that build up and build up and suck the blood out of a project drop by drop over long periods. As a developer all you can do is cross your fingers and hope you aren't the one who slams into these walls. Yes there's bad planning on a lot of projects but frankly no one is prescient and planning is a hell of a lot easier said than done even by the best. The money required to adequately be a 'just in case' fund against the worst case scenarios would add an astronomical number to most projects and strangle them in the Kickstarter crib.

But ok, let's say there's a hypothetical scenario the glaring incompetence of a project's management is plain for all to see. How/why should they pay the money back? To start with the how, where exactly is the money to pay back going to come from? Do you think any bank is going to give a loan to someone to do so? you'd be laughed out of the building. Sell off your assets? What assets and who would buy them?
As for the why, are you going to insist the developer bankrupt themselves personally? There is no way to coerce that because the exact purpose of a corporation is to allow enterprise without someone having to force their personal finances being dragged into their business failures and I highly doubt anyone would render themselves homeless just to repay out of the goodness of their hearts, especially when their financial future is likely completely shot by their failure.