PayPal is changing its purchase protection rules to reflect increasing risks associated with crowdfunding. The new language, which will go into effect in June, state that “payments on crowdfunding platforms” will no longer be eligible for Purchase Protection.
The move reflects two interesting trends. First, it shows that crowdfunding is going strong in entirely new populations and this popularity is bringing new customers to the fray. These customers are clearly getting upset when crowdfunding projects fail and are actively trying to grab their cash back when it happens.
Second, it shows that PayPal doesn’t want to deal with the risks associated with crowdfunding that are similar to the risks associated with purchasing or paying a government agency and “gambling, gaming and/or any other activity with an entry fee and a prize,” two other situations where Payment Protection will be made unavailable. In short, it’s gotten more popular and more dangerous to back crowdfunded projects.
PayPal’s Purchasing Protection ensures that sellers will not be charged for payments sent from a hacked account or on items that customers claimed to have never arrived. Buyers, on other hand, are protected “if an eligible item that you’ve bought online doesn’t arrive, or doesn’t match the seller’s description.”