Paypal is changing its policy on failed crowd-funding campaigns. Crowd-funding campaigns are featured on sites like Kickstarter or GoFundMe. They often offer some type of premium for investing in an idea or product, such as a special edition of the item or a t-shirt.

But this isn’t like purchasing an item online. If you purchase a flash drive from WorldStart, the product already exists and only needs to be shipped to you.

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When you invest in a Kickstarter, you’re putting in an investment. Investments can have a great return or zero return. In the past, when people complained that these projects didn’t deliver the promised rewards, PayPal would refund the money to backers. Starting June 25, they are changing that policy. As with any other investment, the responsibility for resolving disputes will be between the investor and the company they are investing in. As long as the original investment was an authorized transaction, Paypal won’t be issuing a refund.

Most crowdfunding sites will issue refunds if the original goal isn’t met. But if that goal is met and promises aren’t kept, it’s another story.  Often failed ventures just don’t have the money to return. Usually, the money has been spent trying to get the project off the ground. On the bright side, less than 10% of Kickstarter projects fail to deliver the promised rewards.

~ Cynthia