After Initially Locking Down Funds, PayPal Relents And Gives GlassUp Access To Indiegogo Cash

The GlassUp, an ambitious Indiegogo project that wanted to take the concept of Glass and make it more about passive consumption of content than about privacy-treading recording, video and photography, was in danger of losing a full third of its funding earlier today due to a PayPal rule, but is now on track again after the payments giant reversed its initial decision.

In what was potentially a disastrous development for hardware companies and others that use Indiegogo to fund projects and collect money from backers to help devices enter production, PayPal had at first stated that any backing pledges made via its service would have to be withheld until after GlassUp delivered its hardware to buyers. That’s fine and dandy when it comes to traditional e-commerce endeavours, where a product is generally shipped before someone is charged, but awkward when the whole point is to fund the creation of something that doesn’t exist with money freely offered up front.

GlassUp had managed to raise over $100,000 when it found out that PayPal had locked its account and made a third of its funds (those pledged via PayPal, as opposed to the other payment methods on Indiegogo) unavailable to the creators, which understandable put a bit of a dent in their plans. The project still has some ways to go – it needs $50,000 more in just a week – and it turns out that the PayPal donations were turned off around a week ago, with GlassUp creator Francesco Giartosio finding out only when a prospective backer notified him that his pledged didn’t go through.

PayPal has resolved the issue as of today, and offered the following statement to TechCrunch via a spokesperson:

We looked into what was happening with GlassUp and corrected the situation earlier today. GlassUp now has access to all of the funds that they’ve raised on Indiegogo through PayPal. We think they are developing a fascinating product and don’t want to impede their innovation in any way.

So from PayPal’s perspective, this was a simple screw-up and the company even goes out of its way to commend GlassUp’s “innovation.” But the fact remains that for up to a week PayPal had locked the GlassUp account, meaning it’s not clear where exactly the funding would be at this point had that not happened.

GlassUp could still make its goal by the deadline, but there’s always a chance that future crowdfunding programs face similar difficulties. Perhaps the answer lies in looking elsewhere for handling pledges to these kinds of campaigns, but keeping PayPal off the list of available payment methods would definitely limit the ease with which contributors can offer up funds, so hopefully this issue helps make sure similar problems don’t happen with other projects down the road.

Additional reporting by Natasha Lomas