PayPal Sometimes Gives Your Donation to Wrong Charity: Suit

Lawsuit says if charities aren't registered, another nonprofit gets donations
By Evann Gastaldo,  Newser Staff
Posted Mar 1, 2017 2:45 PM CST
PayPal Sometimes Gives Your Donation to Wrong Charity: Suit
This March 10, 2015, file photo, shows signage outside PayPal's headquarters in San Jose, Calif.   (AP Photo/Jeff Chiu, File)

PayPal's Giving Fund charitable platform, which says it allows people to donate directly to more than a million charities, raised more than $7 billion last year—but a new lawsuit alleges that many charities may never receive the donations intended for them. The suit alleges that in order to receive the funds, a charity must be registered with PayPal. If it is not, per the suit, PayPal gives the charity six months to register; if it does not do so, PayPal will distribute the donations to different nonprofit organizations. In addition, the suit notes that this practice forces nonprofits into a PayPal business account they may not want, "thus generating revenues for PayPal" via fees if the accounts are used to conduct business. PayPal says it is reviewing the lawsuit and is "fully prepared to defend ourselves in this matter," per the Guardian.

The federal class-action suit was filed on behalf of Terry Kass, an Illinois resident who used the Giving Fund platform late last year, and the North Shore Health Center, one of the charities to which she tried to donate. Though Kass found a PayPal page for the legal aid clinic when she made her donations, an employee of the center later told her the donation had never been received. That's when she followed up with PayPal and found out that 10 of the 13 charities to which she had attempted to donate were not registered with Giving Fund. The suit alleges that PayPal did not inform any of the charities of the need to register in order to receive the donations, and that before distributing the funds to a different charity, they are placed in an interest-bearing account that benefits PayPal. Per NPR, the suit claims thousands of charities have been affected by PayPal's practices. (More PayPal stories.)

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