PayPal is going to lose this one. They're acting as a charity fund-raiser, which is highly regulated due to a long history of flaky fund-raising.[1] PayPal is probably going to claim they're a special snowflake because they're a payment processor or something, but that probably won't fly, because PayPal claimed to the public that they were collecting funds on behalf of a charity.
Why is it, when an established company does something like this, the headline talks about "redirecting contributions", instead of calling it what it is?
Why not just say "Paypal Defrauds Donors"?
So my parents run a non-profit and a recently letter we got from Amazon Smile explains what is happening here. Amazon Smile is a service were you can choose a charity for Amazon to donate to. When you shop at Amazon, a small percentage of that money goes to the selected charity.
Recently they got a letter in the mail explaining they had been chosen as recipients of this Amazon Smile money. The thing is, they never chose to be featured on Amazon Smile. Amazon used some database of non-profits (that they had never heard of) in order to present options to customers, then notified the non-profits later. The letter specifically said that in order to collect the money, they needed to create an account with Amazon smile.
PayPal is probably just pre-populating their list of charities, failing to fully notify recipients of the donations, then saying "Whoops, I guess we got to do something with the money."
This looks really bad for PayPal.
"It did not have an account with the Giving Fund, even though its profile page there included its logo, mission statement and tax identification number."
TLDR; PayPal is soliciting donations for over a million charities, most of whom are unaware of this.
At least some of the donations would have been made directly to charities had Paypal not advertized in their name. So charities who weren't informed, couldn't get or didn't want a Paypal account were deprived of donations.
They did the whole thing to get people to use Paypal but didn't want to put in the effort to run it properly. In effect they ended up defrauding charities. If you put up a sign that says "accepting donations for charity X" and then don't make every effort to donate the collected money to X, it's fraud.
"Paypal accused of defrauding charities" would have been the appropriate title.
Using charities legally registered names and goodwill to acquire money into your business, with literally no connection whatsoever to those legally registered entities is the definition of fraud.
Imagine you started to collect on behalf of the red cross, directly to your personal bank account, then sent the red cross a letter, letting them know that if they wanted to register with you and accept your terms, you might give them some money that you fraudulently collected by abusing their name and good will.
Fuck PAYPAL
So basically PayPal itself would call it fraud if somebody else would be doing it, right?
It looks like that the Humble Bundle is also affected by this. On their webpage, it says "Charitable contributions administered by PayPal Giving Fund" and "PayPal Giving Fund retains ultimate discretion and control over the use of the donations it receives from Humble Bundle."
Is there a way to know which charities are registered with Paypal?
PayPal is long known for its fraudulent behavior. Here is a good list of references:
I think this (charity donations) is one of the perfect use cases for the blockchain. To be clear, I am not suggesting Bitcoin, but the underlying blockchain technology.
Having publicly visible transactions will be a huge boost to transparency and shady practices like those described in the article just won't fly. Every other month a news article about banks exploring blockchain tech keep popping up in the media and I hope banks find a way to incorporate blockchain technology into the existing system.
It seems to me that the donors are the little fish here and that charities who's logos were used with the intent to deceive the customer/doner are the ones that can eat PatPal alive.
Given the founder's opinion, caught on video, that "single-digit millionaires have no effective access to the legal system", perhaps they weren't too concerned.
https://theintercept.com/2016/10/31/trump-fan-peter-thiel-sa...
But this offense will tried in a different courtroom, the same that VW and Uber have lately been 'splaining themselves in.
Whoever owns PayPal must have had experience running an extortion racket
Man, I donated through this. I didn't know the charity wouldn't get the money.
They picked the perfect plaintiff to lead this fight. A woman who did her due dilligence -- compared PayPal's website to the charity websites, donated a significant amount of money, then followed up with those donations. Unless PayPal can prove they repeatedly attempted to disburse the money to the charities by encouraging them to open an account, I don't see how PayPal can come out on top with this one.
Truly a garbage company.
The actual lawsuit: https://www.scribd.com/document/340533057/PayPal-Complaint-F...
Aside from the contributions themselves, they are seeking $1,500 per occurance in "treble damages" and an unspecified amount for punitive damages.
If a human were to do something like this he would get prison time. Instead since it has been done by "a company", nothing will be done. I wish we, the humanity, would start to treat limited liability only as a financial tool. If something like this is done, it's not the company that must be sued, but the people who made it.
How is (a) claiming you accept donations on behalf of a charity and (b) not passing them on anything other than blatantly fraudulent? Surely at the least those charities have a claim against PayPal as well.
It seems this needs to be appended to https://en.wikipedia.org/wiki/PayPal#Criticism
if you have been screwed by PayPal please consider Bitcoin. I started accepting Bitcoin for various things and really love being fully in control of my money. there are no intermediaries!
If they are a money "transmitter", then how are you allowed to keep a balance? I am ignorant of the lawsaround that, but it seems that's a womp rate sized hole?
So it is kind of hijacking those charities to be their members?
Paypal is evil, but what are the alternatives?
AliPay? WebMoney? Bitcoin??
The banks are ultimately to blame for the rise of companies like PayPal.
Bank transfers are still batch oriented and stuck in the 1960s, they have no excuse for not providing all the services PayPal provides.
Remember when in the aftermath of Katrina, Paypal seized donations fundraised from Something Awful intended for the Red Cross for "fraud" and then refused to release them even when everyone told them they knew full well what was going on? After they got called onto the mat they finally agreed to release the funds but only to one of their own selected list of charities, all of which had vastly greater overhead expenses. In the end Lowtax finally had to tell them to refund everyone and have them make individual donations instead.
Paypal is shit, the best thing you can hope is that you fly under the radar, because the horror stories are very real. They are not a bank, they are an unholy, unregulated "money transmitter" and if they choose to screw you there is nothing you can do about it. Have fun with your mandatory binding arbitration.