In terms of public interest, changes to terms and conditions typically rank alongside slow-news-day local stories, but this one is arguably quite significant given what it says about the environment for crowdfunding. In a covert change to its terms and conditions, PayPal now excludes payments made through crowdfunding from the infamous Purchase Protection program. From June 25, 2016, the revised terms and conditions will be in effect.
That is a risk associated with crowdfunding. It goes without saying that supporting a project on Indiegogo differs from buying something on eBay; the real surprise here is why it took so long to catch up. I must admit that it never occurred to me to even try the policy; the majority of people who use crowdfunding frequently (including myself) will have wasted good money on a subpar product. Crowdfunding is risky by definition. You’re contributing money to a pot based on someone else’s concept, and your only indication of whether the concept will take root is instinct. But a Kickstarter report from the previous year claimed that
In the grand scheme of things, only 9% of projects fail to deliver rewards, which isn’t too bad, though it’s not clear if that percentage represents the norm. In any case, it’s a semi-moot point because Kickstarter and PayPal aren’t integrated.
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In a statement sent to Tech Crunch, PayPal said:
“We have excluded payments made to crowdfunding campaigns from our buyer protection programs in Australia, Brazil, Canada, Japan, the United States, and other nations. This is in line with the dangers and ambiguities associated with supporting crowdfunding campaigns, which do not ensure a return on the investment made in these kinds of campaigns. In collaboration with our partners at the crowdfunding platforms, we push fundraisers to inform donors of the risks associated with supporting their cause.
Although it makes sense, it’s probably still helpful to see the obvious thing stated clearly: if you support a crowdfunding campaign, you’re taking a risk. For God’s sake, use caution and don’t invest money you can’t afford to lose.
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