Blips: Papers, Please

Source: Crowdfunding's Secret Enemy Is PayPal
Author: Patrick Klepek
Site: Giant Bomb

In case you hadn't noticed, there's a lot of money being thrown around in crowdfunding campaigns these days. PayPal, the online payment processing company has noticed as well, since they're handling a significant portion of the funds being contributed to these campaigns. More than a handful of times, PayPal has withheld funds and frozen accounts of some high-earning projects as a means of making sure the companies' intentions are legitimate and defending PayPal from getting stuck footing massive chargeback bills. The problem is that these game developers aren't properly informed of this procedure, and have had to resort to public complaints to reverse PayPal's actions. In a new article by Patrick Klepek, he details the frustration that crowdfunded game developers are facing when they're raised a bunch of money, and then aren't given it without having to spend time and energy making a fuss.

From PayPal's side, the desire to protect themselves from the repercussions of scammers and money laundering schemes is legitimate. The problem is how they're going about it. If it was stated up front that there would be a set timetable for the release of funds from PayPal, that would be one thing, but is the instances that Klepek notes in his piece, PayPal typically doesn't make their move until after a campaign has come to a close. Even a word from the crowdfunding platforms would be a helpful forewarning about the series of events to follow. Perhaps PayPal could offer a verification system upfront, the same way they do after the fact for establishing legitimacy, so that these game developers can clear up any confusion before it becomes an issue.

That said, Kickstarter and IndieGoGo are services that allow users to raise money on nothing but promises, and don't necessarily require any prior experience or background in what's being projected (though it certainly helps). Still, it's hard to see these recent kerfuffles as anything but poor communication and customer policy on the part of PayPal, which is already just about the least human, most faceless company I can think of. I'm glad to hear that so many of these cases did see resolution in the end, and hope PayPal has learned their lesson here. If they're not working on changes to keep unnecessary funds withholding regarding crowdfunding campaigns from occurring on a regular basis, then their reputation will see further damage and the doorway for competition will crack open a little further. Ultimately, that might not be such a bad thing either.