PayPal Updates User Agreement; Removes Purchase Protection For Crowdfunding Programmes

PayPal is now excluding crowdfunding purchases from its Purchase Protection programme, which means that people will have to be a little more careful with the projects they back.

In the past, PayPal would ensure that crowdfunding backers would be able to get refunds on projects that fail to deliver. This was generally an additional layer of protection for the consumer, and treated crowdfunding like any other commercial transaction. However, the looks like the nine-percent failure rate of crowdfunding projects has prompted the company to rethink how it deals with these higher risk purchases.

Crowdfunding platforms aren’t the only thing being added to the list of exceptions for Purchase Protections; PayPal has also added purchases from government agencies and any activity with an entry fee and prize. These last two additions will likely not have much of an impact on the average consumer, and it looks more like the payment service is simply closing some loopholes.

The new user agreement goes into effect on 25 June, and PayPal is advising people to close their accounts before that date if they do not accept the revised terms. PayPal’s new changes aren’t exactly unexpected. Many crowdfunded items fail to deliver on time, or at all for that matter, and it would be problematic for the company to continually have to process refunds for these projects.

[Source: PayPal]