PayPal Halts Crowdfunding Payments To Skullgirls Dev

Steven Bogos

The Taco Man
Jan 17, 2013
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PayPal Halts Crowdfunding Payments To Skullgirls Dev


PayPal says it was not willing to take the risk that backers of the Skullgirls crowdfunding campaign would demand refunds.

Remember the heartwarming story of the Skullgirls crowdfunding campaign [http://www.escapistmagazine.com/news/view/122926-Update-Skullgirls-First-DLC-Character-And-PC-Version-Arrives-in-July] on IndieGoGo? Developer Lab Zero asked its fans for just $150,000 in order to develop a DLC character for the popular fighting game, and ended up raising over $800,000. Happy smiles went all around, the devs raised their money, fans will receive five new DLC characters for the game, and the whole story was a poster child for crowdfunding.

But every Christmas miracle has an Ebeneezer Scrooge, and in this tale, the role of the villain is played by PayPal, for refusing to pay out the majority of the crowdfunding campaign's funds on the basis that it was not willing to take the risk that backers would demand refunds. The majority of backers to the campaign opted to pay through PayPal, which means the popular payment service was sitting on $700,000 of the $829,000 raised. This left Lab Zero games unable to pay its staff, and may have affected the projected release schedule of the DLC characters.

PayPal offered to unfreeze the funds if Lab Zero agreed to take on the burden of providing refunds if necessary, but CEO Peter Bartholow refused. He said that the point of its crowdfunding campaign was to provide money for development costs, and Lab Zero should not be accountable for refunds.

The good news is that after venting his frustrations on the NeoGAF forums, Bartholow convinced PayPal to unfreeze the account, on the condition that it withholds $35,000 as collateral. He has filed a complaint with the Consumer Financial Protection Bureau, saying that none of PayPal's rival payment services, such as Amazon, have ever stooped to this level of scummyness.

This is not the first time small-time devs have had a run in with PayPal. Minecraft's Markus "Notch" Persson found himself in almost the exact same situation [http://www.escapistmagazine.com/news/view/103385-PayPal-Freezes-750K-in-MineCraft-Devs-Account] several years ago, and there are plenty of recent tales of PayPal trying to "Scrooge" its consumers.

Source: VG24/7 [http://www.vg247.com/2013/04/23/skullgirls-crowdfunding-stymied-by-paypal/]

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Zombie_Moogle

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Dec 25, 2008
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Congrats, Amazon Payments; you just got a lot of new customers
(myself included; should have permanently switched after the Wikileaks fiasco)
 

Loop Stricken

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Jun 17, 2009
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I've grown to despise PayPal ever since the eBay horror stories began to surface, about how buyers would merely request their payment back and PP would comply, no questions asked.

I don't sell on eBay myself, but I know people who effectively make a living off've it, so I can't condone this shitty behaviour.
 

kailus13

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Mar 3, 2013
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Given how much they take for processing the transactions, PayPal should cover these things.
 

Jumwa

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Zombie_Moogle said:
Congrats, Amazon Payments; you just got a lot of new customers
(myself included; should have permanently switched after the Wikileaks fiasco)
I don't know what Amazon Payments is like, but I know selling through Amazon they do something similar to sellers. For instance, indie authors are subject to a week long return period. Wherein anyone can just return any book they bought for a full refund. Considering the popularity of shorts and novellas in many of the most popular genres, this is absurd. Return rates for indie authors all report being at a solid 10%, which says to me there's just a consistent degree of abuse with people reading then returning books.
 

Krantos

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Steven Bogos said:
PayPal offered to unfreeze the funds if Lab Zero agreed to take on the burden of providing refunds if necessary, but CEO Peter Bartholow refused. He said that the point of its crowdfunding campaign was to provide money for development costs, and Lab Zero should not be accountable for refunds.
This is confusing me. It sounds like all Paypal is asking for is for Lab Zero to be responsible for refunds. If they unfreeze the account (as in give Lab Zero all the money) shouldn't that money be used if people demand refunds? Would Lab Zero really take all the money and then leave Paypal with the bill if customers demand refunds? That sounds really shitty in itself.

Am I missing something here?
 

Zaz

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Jul 1, 2011
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Everytime I see someone accepting paypal payments I feel bad for them.
 

Tygerml

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Nov 16, 2008
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Maybe I'm just looking at this rationally, but why shouldn't the developers be the ones to be responsible for refunds? If I was Paypal I sure wouldn't want to be stuck holding the bag if the game ends up sucking.

I've used Paypal for years and never had an issue with them. The only issue I've had was with EA and Origin, and that's because they were too stupid to take my money when I was waving it in their face. Paypal was involved in that transaction and they handled it fine.
 

Vivi22

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Krantos said:
Steven Bogos said:
PayPal offered to unfreeze the funds if Lab Zero agreed to take on the burden of providing refunds if necessary, but CEO Peter Bartholow refused. He said that the point of its crowdfunding campaign was to provide money for development costs, and Lab Zero should not be accountable for refunds.
This is confusing me. It sounds like all Paypal is asking for is for Lab Zero to be responsible for refunds. If they unfreeze the account (as in give Lab Zero all the money) shouldn't that money be used if people demand refunds? Would Lab Zero really take all the money and then leave Paypal with the bill if customers demand refunds? That sounds really shitty in itself.

Am I missing something here?
This is a crowdfunding situation. They're not really selling a product so customers asking for refunds makes no sense. They're investing, not purchasing. Even if we went out on a limb and pretended the people investing were really just paying to receive DLC characters then a refund makes even less sense. When was the last time someone asked for and got a refund on some DLC? Most publishers will tell you to take a hike.

I do agree that if Lab Zero got people asking for refunds they should be the ones dealing with it though. I'd be surprised if Paypal wouldn't be well within their rights to tell someone asking for a refund to fuck off and go bother Lab Zero.
 

Slash2x

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Dec 7, 2009
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Krantos said:
Steven Bogos said:
PayPal offered to unfreeze the funds if Lab Zero agreed to take on the burden of providing refunds if necessary, but CEO Peter Bartholow refused. He said that the point of its crowdfunding campaign was to provide money for development costs, and Lab Zero should not be accountable for refunds.
This is confusing me. It sounds like all Paypal is asking for is for Lab Zero to be responsible for refunds. If they unfreeze the account (as in give Lab Zero all the money) shouldn't that money be used if people demand refunds? Would Lab Zero really take all the money and then leave Paypal with the bill if customers demand refunds? That sounds really shitty in itself.

Am I missing something here?
Thank you!

Paypal is protecting the CONSUMER here.... Heaven forbid we make sure the consumer is taken care of. We should all switch to another payment company that will just throw our money at any company and not take any precautions with it. So if protecting the people who are buy the service and not the company raking in money is terrible..... Well
 

Zombie_Moogle

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Dec 25, 2008
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slash2x said:
Krantos said:
Steven Bogos said:
PayPal offered to unfreeze the funds if Lab Zero agreed to take on the burden of providing refunds if necessary, but CEO Peter Bartholow refused. He said that the point of its crowdfunding campaign was to provide money for development costs, and Lab Zero should not be accountable for refunds.
This is confusing me. It sounds like all Paypal is asking for is for Lab Zero to be responsible for refunds. If they unfreeze the account (as in give Lab Zero all the money) shouldn't that money be used if people demand refunds? Would Lab Zero really take all the money and then leave Paypal with the bill if customers demand refunds? That sounds really shitty in itself.

Am I missing something here?
Thank you!

Paypal is protecting the CONSUMER here.... Heaven forbid we make sure the consumer is taken care of. We should all switch to another payment company that will just throw our money at any company and not take any precautions with it. So if protecting the people who are buy the service and not the company raking in money is terrible..... Well
It's an issue of Paypal deciding what people are allowed to spend their money on. Crowd-funding is inherently risky; anybody that doesn't know that doesn't deserve a refund.

As stated in the article, Paypal has been known to crown itself arbiter of internet spending on occasion. I'm beginning to think that might be why Kickstarter uses Amazon Payment (which are not subject to refund after it ends)\

Think before you spend, people
 

Steven Bogos

The Taco Man
Jan 17, 2013
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Well then it seems to me they should get a better refund policy. Wasn't PayPal the one that froze accounts simply because they grew too quickly?
 

MiskWisk

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Mar 17, 2012
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Loop Stricken said:
I've grown to despise PayPal ever since the eBay horror stories began to surface, about how buyers would merely request their payment back and PP would comply, no questions asked.
Oh how I wish I was in that lot. Instead I got screwed over by the guy I bought from and Paypal just refused to do anything for several months.

OT: Well, if I needed another reason to avoid Paypal, I got one.
 

Steven Bogos

The Taco Man
Jan 17, 2013
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I have to laugh at the people who say they are scummy because they are looking out for consumers...

OT: Its good they worked out a deal.
 

Formica Archonis

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Nov 13, 2009
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One of the many, many, reasons my once-heavily-used Paypal account is now in the "used because they don't accept anything else" category.
 

Username Redacted

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Desert Punk said:
I have to laugh at the people who say they are scummy because they are looking out for consumers...

OT: Its good they worked out a deal.
Except that they're not quit looking out for the customers. First off this was donations (i.e. something you're giving of your own free will and goodwill) and PayPal is worried about people requesting refunds (which should already start to give you an idea of what kind of people we're dealing with). What the article doesn't mention is why this is happening. That would be that the extra money that Skullgirls got from their donation drive was supposed to go to the development of other characters as voted on by the fans over several rounds of elimination voting. What has (allegedly) been happening is that people whose favorite character got eliminated from consideration are filing chargebacks for the money they donated. It's also worth noting that since anyone who donated $1 or more was allowed to vote that this could theoretically lead to a huge number of minor nuisance chargebacks. Normally I'm all for consumer protection but in this case I would really call the people who're causing these issues consumers.