A class action lawsuit filed in Illinois, USA, claims PayPal misled thousands over charitable donations.
According to the lawsuit, donations made through PayPal’s Giving Fund platform may often never reach their intended targets.
Lawyers pursuing the case say specifically that the PayPal Giving Fund will redirect donated money to a different charity if the original charity of choice has not signed up properly with PayPal. Controversially, PayPal apparently also makes such transactions without telling the donor or the original charity.
At the moment, according to the lawsuit that was filed on Tuesday, when charitable accounts are not set up correctly, PayPal continues to accept monetary donations on their behalf. But after six months, however, PayPal will allegedly redirect the donations to other charities instead, and fail to notify both the donors and intended recipients when this happens, “without regard to the intention, beliefs, or desires of the donor.”
That said, it is important to note that at the time of writing, the actual scale of deception by PayPal in this matter is not apparent, and that only donations being made through the PayPal Giving Fund platform are in dispute. Money donated to a charity that simply goes through a PayPal account, and donations to large charities are most likely not affected.
According to CNBC, one plaintiff claims that of her $3,250 December donations to 13 different charities through PayPal, only a total of $100 was distributed between three charities of her choosing. The rest, the suit says, is being withheld by PayPal.
PayPal lists a group of charities as “trusted” recipients on its website, but this apparently doesn’t mean they’re capable of receiving donations through the platform, the suit says. To receive the money donated to them, charities must have two accounts — a giving fund account, and a business account.
The lawsuit complaint suggests that the reason for this is so that PayPal can “force charitable organizations that might not have otherwise created PayPal business accounts to open and utilize such accounts in their daily business, thus generating revenues for PayPal” through fees. That part of the complaint probably won’t get too far if the case ever goes to trial, as it sounds more like common business practice and a legal regulatory undertaking all businesses must undertake, charity or not.
Of course, most larger national and international charities will have both accounts. But “hundreds of thousands of smaller charities” have not gone through the process, the lawsuit says. But that said as well, there are many charities currently listed on the Giving Fund site that people can donate to, with no indication that they aren’t set up to receive funds.
PayPal says that when such a charity receives a donation, PayPal will contact the organization “at regular intervals … in order to enrol them” — and that after six months, if they don’t enrol, the funds may be “reassigned.”
It doesn’t seem right though, does it?