Paypal Freezing Funds for Successful Campaign

#1 Edited by DocHaus (1318 posts) -

Remember the issue with Skullgirls or Glassup, how despite having successfully passed the fundraising target on Indiegogo, PayPal would freeze their funds because of reasons? Well, now that Yatagarasu: Attack on Cataclysm has been wildly successful, they are doing it again. According to the devs:

The email from PayPal advises us that they have ‘reserved’ the funding and will release ‘up to 50% of the funds’ before Yatagarasu AoC is released and the rest only after they have verified copies of paid invoices. What’s more, they provide no option to discuss, stating we should ‘contact us closer to the release date beginning of next year’ to arrange release of the funds.

We appreciate irony as much as the next person, but PayPal refusing to provide funds legitimately raised to complete a game until after the game is released isn’t just beyond ridiculous – it potentially derails the game development. To add insult to injury, not only do Nyu Media and the Yatagarasu developer team have rock solid track records, but we’ve already provided PayPal with documents providing the bona fides of Nyu Media, the developer, and the campaign.

As someone who is also considering trying to launch a crowdfunding campaign (for a non-game business, but still) these reports are making me a little nervous. Raise too much money and Paypal will take their 4% cut, then freeze half or all of your funds until they feel like letting go.

In the meantime, as someone who kicked in a few bucks for this campaign, I hope that enough response will make them loosen their grip, or that Nyu Media can find an alternative to PayPal if the worst happens.

#2 Edited by The_Laughing_Man (13629 posts) -

Didnt this also happen for Minecraft?

#3 Posted by TheHT (10933 posts) -

ಠ_ಠ

Online
#4 Posted by Hunter5024 (5555 posts) -

What right do they have to do that? If my grandma sent me money through paypal, could they just say "Hold on a minute, we're going to hold onto half of this for now because we don't trust you to spend this responsibly." People gave the developers their money, it was their choice, and they knew the risk when they did it. Paypal is just a middle man, they're delivering the money to the developers electronically. What right does a delivery boy have to hold on to something you send to someone? This seems like a HUGE overstep of their power.

#5 Posted by Aetheldod (3516 posts) -

Dont read to much in to this ... its a bank being a bank , banks have the nasty tendency of coming with excuses to give your money , because they invest that money to get more of it and cant give it to you untill x amount of time passes (the amount of time that the investment they made pays off) and very tackless tactic for sure , not ungeard of banking/money insitutions. There must be a legal recourse for the developers to tackle this but in hindsight its probably better they dont , as to not risk the money. Fucking institutions.

#6 Posted by TechHits (1372 posts) -

What right do they have to do that? If my grandma sent me money through paypal, could they just say "Hold on a minute, we're going to hold onto half of this for now because we don't trust you to spend this responsibly." People gave the developers their money, it was their choice, and they knew the risk when they did it. Paypal is just a middle man, they're delivering the money to the developers electronically. What right does a delivery boy have to hold on to something you send to someone? This seems like a HUGE overstep of their power.

no it isn't the same, the money was given with the expectation of a product. Paypal is worried that they will have to refund everyones money if a product isn't delivered, so they are holding half as collateral.

I don't think it's right what paypal is doing, but I find it shameful that people are completely ignoring why it's happening. Most people's reactions to this that I've seen are just " they're not giving it to them b/c reasons!!! you should be outraged!!!"

Even the orginal post on this thread says stuff like:

@dochaus said:

...PayPal would freeze their funds because of reasons? Well, now that Yatagarasu: Attack on Cataclysm has been wildly successful, they are doing it again. According to the devs:

...Paypal will take their 4% cut, then freeze half or all of your funds until they feel like letting go.

#7 Posted by ThunderSlash (1574 posts) -

That is a pretty dick move by Paypal. How come this didn't happen with Double Fine and their 2 projects?

#8 Posted by Hunter5024 (5555 posts) -

@techhits said:

@hunter5024 said:

What right do they have to do that? If my grandma sent me money through paypal, could they just say "Hold on a minute, we're going to hold onto half of this for now because we don't trust you to spend this responsibly." People gave the developers their money, it was their choice, and they knew the risk when they did it. Paypal is just a middle man, they're delivering the money to the developers electronically. What right does a delivery boy have to hold on to something you send to someone? This seems like a HUGE overstep of their power.

no it isn't the same, the money was given with the expectation of a product. Paypal is worried that they will have to refund everyones money if a product isn't delivered, so they are holding half as collateral.

I don't think it's right what paypal is doing, but I find it shameful that people are completely ignoring why it's happening. Most people's reactions to this that I've seen are just " they're not giving it to them b/c reasons!!! you should be outraged!!!"

That's ridiculous. Kickstarter and Indiegogo aren't places where you buy games, they're places where you fund games. Getting the game is a reward for your donation, if it pans out. Both sites define the money as a donation, and there's a whole section on each Kickstarter page devoted to the risks of the product, so that you're aware that this isn't a sure thing. Even if this were an online storefront, which it isnt, it wouldn't be up to Paypal to refund the money of people who bought this stuff, it would be up to either Indiegogo, or the creators of the project. This money is supposed to be used to create the game, and they can't actually make the game if they don't have access to the funds they procured to do so. I doubt any of the people who backed this project approve of Paypal withholding the money they donated, especially if it puts the project at risk, which it very easily could. As it stands, hundreds of people told Paypal to give their money to someone, and instead they kept half of it to themselves. I consider that stealing.

#9 Posted by OldGuy (1517 posts) -

@thunderslash: Because the vast majority of the DFA funds were raised via Kickstarter (which doesn't use PayPal)...

Lesson: If at all possible do not use a service to raise funds where PayPal is the main go between for money collection.

#10 Posted by Fattony12000 (7098 posts) -

Dont read to much in to this ... its a bank being a bank , banks have the nasty tendency of coming with excuses to give your money , because they invest that money to get more of it and cant give it to you untill x amount of time passes (the amount of time that the investment they made pays off) and very tackless tactic for sure , not ungeard of banking/money insitutions. There must be a legal recourse for the developers to tackle this but in hindsight its probably better they dont , as to not risk the money. Fucking institutions.

  • In the United States, PayPal is licensed as a money transmitter on a state-by-state basis. PayPal is not classified as a bank in the United States, though the company is subject to some of the rules and regulations governing the financial industry including Regulation E consumer protections and the USA PATRIOT Act.
  • In 2007, PayPal Europe was granted a Luxembourg banking license, which, under European Union law, allows it to conduct banking business throughout the EU. It is therefore regulated as a bank by Luxembourg's banking supervisory authority.
  • In Australia, PayPal is licensed as an Authorised Deposit-taking Institution (ADI) and is thus subject to Australian banking laws and regulations.
#11 Edited by ThunderSlash (1574 posts) -

@oldguy said:

@thunderslash: Because the vast majority of the DFA funds were raised via Kickstarter (which doesn't use PayPal)...

Lesson: If at all possible do not use a service to raise funds where PayPal is the main go between for money collection.

Ah thanks for the clarification. I was under the impression that Kickstarter also had Paypal be the main middleman.

#12 Posted by StarvingGamer (8040 posts) -

Seems like PayPal has released all of the funds. Hooray!

#13 Posted by Yesiamaduck (912 posts) -

As with every bank type operation they're legally obliged to suspend funds if it could be seen as money laundering.

#15 Edited by DocHaus (1318 posts) -

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