eBay Inc (EBAY): PayPal To Improve Crowdfunding Policies

Posted Sep 13, 2013

eBay Inc (NASDAQ:EBAY) has reported that PayPal will be improving their crowdfunding policies.  This follows an incident where Mailpile’s PayPal account was frozen after they raised $45,000 in crowdfunding.  Mailpile ended up raising a total of $163,192 after the incident happened and the company got a lot of press for that.  PayPal apologized for the incident and donated $1,000 to the Mailpile project.

“Crowdfunding sites are an exciting and innovative new way to directly connect entrepreneurs with the people who want to help them create new products and services. However, there are unique regulatory and risk aspects inherent to this new way to raise money from supporters around the world. To name one, we sometimes hear from campaign contributors that they are confused about what exactly their money is going towards, and assume that they?ll get it back if the venture is not successful,” stated PayPal VP of Risk Management Tomer Barel.

Barel said that the model is new and so it is potentially open to abuse.  PayPal has a responsibility to ensure the system is secure and is in compliance with government regulations.  Some of PayPal’s competitors refuse to support crowd-funding at all.