Class Action Filed Against PayPal’s Charitable Giving Fund

Elizabeth DiNardo, Esq. | Associate Counsel

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On February 28, 2017, a punitive class action lawsuit was filed against popular online payment processing company, PayPal, alleging that the company’s PayPal Giving Fund does not actually deliver donated funds to customer’s pre-selected charities unless the charity has already set up a PayPal account.

In the complaint, filed in Illinois federal court, lead plaintiff Terry Kass claims that she used the PayPal Giving Fund platform to donate a total amount of $3,250 to 13 specific charities. Kass states that she visited the PayPal info sites for each of her 13 selected charities before transferring the money to the site. However, despite seeing her charities names listed on the PayPal site, in reality only three of her selected charities were actually registered with PayPal. Therefore, only those three charities received Kass’s donations. As Kass later discovered, in order for a charity to actually receive a donation through the PayPal platform they must first have a registered PayPal account. PayPal states that if a donation to an unregistered charity is made and is not claimed by that charity within six months the donation will be redirected to a different registered charity at PayPal’s discretion with no regard given to the donor’s wishes.

Plaintiffs argue that while the premise behind the PayPal Giving Fund is indeed laudable, the company misleads customers into thinking that all charities listed on the site are in fact registered with the company and are set up to receive funds through the platform. Plaintiffs are further aggravated that the company makes no efforts to notify unregistered organizations that a donation has been made in their name, nor does PayPal inform donors that they have donated to an unregistered charity. Kass specifically accuses PayPal of unjust enrichment, fraudulent accounting and of violating the federal Lanham Act, in addition to violating the D.C. Consumer Protection Procedures Act.

 Plaintiffs are requesting that Defendant give a detailed transaction history for all charitable contributions made through the PayPal Giving Fund platform as well as acknowledging that the company redirected funds that rightfully belonged to other charitable organizations.

The case is: Friends for Health: Supporting the North Shore Health Center et al. v. PayPal Inc. et al., Case No.: 1:17-cv-01542, in the U.S. District Court for the Northern District of Illinois

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