PayPal Halts Crowdfunding Payments To Skullgirls Dev

PH3NOmenon

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Oct 23, 2009
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Steven Bogos said:
This left Lab Zero games unable to pay its staff, and may have effected the projected release schedule of the DLC characters.
Not entirely sure, but I think that should be affected, not effected.
 

Kuala BangoDango

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Mar 19, 2009
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Another possible motive for PayPal to do this sort of thing is that while those $700,000 are sitting in PayPal's coffers it's also collecting them a lot of interest (assuming their coffers are bank accounts somewhere). The longer it takes to "work things out" with the final recipient the more PayPal has made extra in interest.

In other words PayPal gets their usual processing fee + extra. The longer it takes to resolve the issue the bigger that extra gets.
 

Slash2x

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Dec 7, 2009
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dunam said:
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
From kickstarter terms of use:
"Kickstarter does not offer refunds. A Project Creator is not required to grant a Backer?s request for a refund unless the Project Creator is unable or unwilling to fulfill the reward."

Each of the rewards includes the game, so as long as they create something resembling the promised game, they've fulfilled it. How does paypal at all become responsible for this? They're a payment method, not a store. Why would they choose to even get into that position?
Because they provide refunds, it is part of the Paypal service. Many people myself included, use Paypal because they will get you your money back if someone tries to screw you over on a purchase. In the case of the kickstarters Paypal may not be a good choice because they are a round peg trying to fit in a square hole. All they see is that the kickstarter did not hit goal so they should not pay.... Right or wrong that is the service that they offer, if you do not want protection on your purchase use another funding source.
 

ClockworkUniverse

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DVS BSTrD said:
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?
Yeah, that's the thing. Paypal's business plan is to handle large amounts of money, then find any excuse they can come up with to keep it. Today, that excuse happens to be "we want to protect the consumer." Other days, it's "we find your huge amount of money suspicious. Give it."
 

jericu

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Oct 22, 2008
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Keep in mind, a large part of Paypal being worried about people demanding refund is because people are acting like children, and whining that they're going to demand their money back if the character they want in the game doesn't make it through the vote that's going on.

It's shitty on Paypal's side, don't get me wrong, but it's understandable to assume people are going to demand refunds when people actually have started saying they're going to demand refunds.
 

Sectan

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Aug 7, 2011
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Keep in mind that I'm no business or financial expert, but with all the people whining about wanting a refund, can't Paypal just tell them to fuck off? I wouldn't think there would be any legal reason for Paypal to hold someone else's money OR be obligated to offer refunds on something like crowdfunding. I've never had any issues with Paypal, but I'll probably restrict my use to my WoW subscription.
 

Xarathox

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DVS BSTrD said:
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?
I set up an account several years ago so I could receive payment for work I had done for someone several states away, only to have PayPal refuse to transfer the money into my bank account. I've got about $1000 sitting around out there in cyber limbo that I'll never see.

Learned my lesson with that whole fiasco. Never use PayPal and don't do any work for anyone who can't hand you cash in person.
 

Rawbeard

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Jan 28, 2010
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Paypal is not stupid. They get nervous if large sums get transfered. They can't afford blowback in case something goes wrong with a non-loaded client. It is just not worth it for them.

Sure, sucks balls, no question. They do this kind of shit and it looks bad, but only because they are scummy, not sleazy like normal banks. I seriously prefer the former.

Also they can use that money for a few days longer... win/win?
 

Lunar Templar

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Sep 20, 2009
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*head desk* really? not seeing why this should be an issue. or do they not get how crowd funding works....
 

Requia

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Sectan said:
Keep in mind that I'm no business or financial expert, but with all the people whining about wanting a refund, can't Paypal just tell them to fuck off? I wouldn't think there would be any legal reason for Paypal to hold someone else's money OR be obligated to offer refunds on something like crowdfunding. I've never had any issues with Paypal, but I'll probably restrict my use to my WoW subscription.
Not necessarily. Under Utah state law (and I think Paypal is actually based here) I can insist on a refund for an electronic payment in the case of fraud up to 4 years after the fact, or a year after the fraud is uncovered (whichever is later), so in the specific case of crowdfunding if it came out that the devs had no intention of ever producing a product (simply failing to produce results wouldn't be fraud) then the payment processor *might* be on the hook, I'm not sure how to interpret the law.

However, there's a claim that Paypal draws interest off frozen accounts, and that it pulls shit like this to make money, as demonstrated by the frozen account, rather than just not taking the backers' money in the first place.
 

Steve the Pocket

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Mar 30, 2009
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So, because people might ask for their money back if they don't get what they paid for, PayPal is refusing to let the company have the money that they need to have in order to actually make what their customers paid for. Thus guaranteeing that their customers will demand their money back.

Brilliant. With logic and money management skills like that, they ought to be working for the Department of the Treasury!
 

Little Gray

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Sep 18, 2012
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Steve the Pocket said:
So, because people might ask for their money back if they don't get what they paid for, PayPal is refusing to let the company have the money that they need to have in order to actually make what their customers paid for. Thus guaranteeing that their customers will demand their money back.

Brilliant. With logic and money management skills like that, they ought to be working for the Department of the Treasury!
Well actually thats pretty much completely wrong.

Paypal pretty much has a no questions asked return policy and all they were asking of the skullgirls dev was to take responsibility for any refunds should they happen. They were told if they wanted 100% of the money in the account that they had to agree to pay out any refunds and if they refused that option they were told they would have to leave a small amount in the account. As the article says it was 35,000 which is less then 5% of the total amount received. They just want to protect their asses because an unusually large amount of money was received over a short period of time for them.

The entire situation had been blown way out of proportion because people dont want to understand the facts at hand.
 

Sartan0

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Apr 5, 2010
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Like many services PayPal is looking out for their interests first then the consumer. They do get stuck sometimes trying to balance interests. I personally will not do business with them due to the way they handle their affairs. That is a choice each person must make themselves. But if you only accept PayPal you will not see any of my money.
 

jpoon

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Mar 26, 2009
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That's sad to hear. I actually use paypal a lot for my job, it makes work a LOT simpler. I knew these guys have done some dirty things before but I didn't realize they were such dbags.

I'll do my best to try to stop using them so much at the very least.