PayPal tells users to donate, then allegedly sends money to the wrong charities

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PayPal donations aren't always going to the right place, a lawsuit says.
PayPal donations aren’t always going to the right place, a lawsuit says.

Image: sean gallup/Getty Images

PayPal wants its users to give to charity, but it’s allegedly messing up the details. 

A federal class-action lawsuit against PayPal says the payment platform is encouraging charitable giving among its users — but that the funds don’t always reach the intended nonprofit. 

Money earmarked for specific charities through PayPal’s Giving Fund is often redirected to other causes when the charity it was meant for doesn’t have a PayPal account, the lawsuit says. The Giving Fund allows users to donate to over a million charitable organizations, and encourages giving with perks like a 1 percent matching donation from PayPal. 

Redirection of that money could be problematic for many reasons: if a PayPal user who donated money doesn’t support the cause the money is redirected to, for example. In many cases, PayPal users tried to support local organizations — a specific legal aid clinic or food bank — and then found their organizations of choice had not received or known about the money. 

The lawsuit, filed in the Federal District Court of Northern Illinois, says that it’s those smaller, local charities that aren’t PayPal-savvy and lose out on donations. If a charity doesn’t set up a PayPal account within six months of receiving a donation, the funds are redirected. That policy is laid out by PayPal online

“On its face, PayPal Giving Fund is an admirable endeavor; however, in practice, it falls woefully short of that mission on numerous fronts,” the complaint says. The complaint outlines the experience of plaintiff Terry Kass, who donated $3,250 to 13 different charities and saw much of that money redirected. 

PayPal said in a statement to the New York Times, “PayPal and PayPal Giving Fund foster positive change and significant social impact by connecting donors and charities. We are fully prepared to defend ourselves in this matter.” PayPal did not immediately respond to a request for comment from Mashable. 

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