Paypal Won't Give Indie Devs Their Money

The small team behind indie fighting game Yatagarasu Attack on Cataclysm have a problem. Despite raising nearly $US120,000 on crowdsourcing site Indiegogo — twice what they asked for — they can't get their hands on over half the cash.

Online shopping intermediaries Paypal have emailed the team and told them:

The email from PayPal advises us that they have 'reserved' the funding and will release 'up to 50% of the funds' before Yatagarasu AoC is released and the rest only after they have verified copies of paid invoices. What's more, they provide no option to discuss, stating we should 'contact us closer to the release date beginning of next year' to arrange release of the funds.

We appreciate irony as much as the next person, but PayPal refusing to provide funds legitimately raised to complete a game until after the game is released isn't just beyond ridiculous — it potentially derails the game development. To add insult to injury, not only do Nyu Media and the Yatagarasu developer team have rock solid track records, but we've already provided PayPal with documents providing the bona fides of Nyu Media, the developer, and the campaign.

That's... quite the pickle. It's not the first time this has happened to a game in Indiegogo; Skullgirls ran into similar problems, and it was only when the developers lodged complaints with people like the Consumer Financial Protection Bureau that Paypal released the money.

Here's hoping things don't need to get that serious here.

PayPal Refuse to Release Yatagarasu AoC Funding [indiegogo]


    So they raised double of the funds they needed to make the game, PayPal is holding onto half the cash until they complete and ship the game to backers. Wouldny this put them back at their goal?

    Seems like PayPal has a reason for doing this, a lot of crowd funded games raise a lot of money but never ship

      So you're saying its fine for paypal to let 60k to sit in their bank account and earn interest?

      That 120k belongs to the developers, they have rights to the full amount of the money

        Think of it as a bonus for coming on budget and shipping a title.

          On budget? They were building a game based on just that, only now half of it is gone.

      When you put it like that it sounds reasonable - until you ask - what right do Paypal have to withhold funds that have been legally transferred to the developer. Now Paypal have guarantees around the funds they collect and as Kickstarters are a risk they're using this as grounds for holding onto the funds - so once again it sounds reasonable. But we still haven't ascertained if they have the right to withhold funds. I'm not sure that they do.

        PayPal has the right to the customers using their service to ensure they get a product they are paying for. its the same level of protection that covers eBay.

          What the fuck is wrong with you?

            What do you mean by that exactly?

              If I give someone money to make something, I would be pissed if paypal decided to withhold it from them.

              Having extra money above the goal allows for the product to be expanded or released on more platforms. Not anymore - you'll just get the bare minimum.

              Crowdfunding is not buying a product. You are funding the development of something. It is a risk you are taking (albeit a small one with lots of other people). Paypal have no right to jump in and act as the middleman.

              Don't you understand these concepts?

              Also apologies for the language. Uncalled for.

          But it's not like eBay where you're buying a product - you send them the money, they send you the product and you're done. People who provide money for a kickstarter are providing the money to get the game made. There may be bonuses such as getting a copy of the game when it's finished, but at the end of the day you're not paying for the game, you're paying for these guys to develop it. So by withholding that money, PayPal may actually be PREVENTING users from getting what they're paying for.

          Paypal is not a storefront. Paypal is not a legislative body. Paypal is a payment processing system.

          I don't understand your comment in this context.

      Like a lot of crowd-funded games, Yatagarasu had stretch goals reliant on certain monetary milestones being met. In order to meet the demands of the increased scope, the project requires the additional money raised during the campaign. If those additional funds are withheld until the game ships, the team will have to produce more content than their initial budget covered before they receive the money for said additional content. It'd be kind of like developing an application for a company, and then being told that the end product needs to be twice as good for the same amount of money, but you'll get the money that you need to cover the additional development once the application is completed, rather than when the project actually needs it.

      However, it's really a non-issue now; it appears that the developers have now been granted access to the full allotment of funds, as seen here:

      Last edited 11/09/13 7:45 am

      Generally with crowdfunding you offer extended goals. They will most likely of promised their customers a lot more for 120k than they would of for 60k.

      Imagine if you did a crap load of overtime at work, or earned yourself a bonus, but then your bank said "Well, you'd normally only get paid X amount, so we'll just hold onto the rest."
      It's their money. Give it to them. It's not Paypal's business to worry about if companies can or cannot deliver products. Besides, anyone involves in crowdfunding knows it (like all investments) is a risk.

        The problem with just giving them the money is Paypal provides protection for the buyers...therefore if the devs take the money, screw it up, don't ship anything, then all who donated can go to Paypal for a refund ... PayPal are being reasonable and I like the level of protection they provide to buyers. I think the lesson here is dont crowdsource thru Paypal.

          What are they offering protection on. Indiegogo isn't a store so what somebody has used the paypal service for is to provide funding to a developer to complete a game they would like to see. In this case the only reason the paypal customer isn't getting what they want (supporting the developer) is because paypal themselves refuse to provide those funds to the developer.

        Whilst I don't agree with what PayPal have done, it's far different from what you're suggesting. The money raised isn't for work done, it's to cover the next stage of development. A closer analogy would be if you were working on a project and management said 'you need to finish phase one before we release the funds for phase two'. If the stretch goals could be completed just as easily once the game is completed (i.e. development time, costs etc would be the same but happen post release) then it still doesn't make much sense but does offer an incentive to release the completed game on time to consumers.

      Stretch goals? Maybe they've announced extra stuff because of the higher amount received, which is now impossible without the money?

      Do PayPal part own indiegogo? Personally I think they need to pull their heads in and just do their "job". Cocks.

      So what if this happened to Chris Roberts or another high profile development? They'd be holding on to millions. That 'extra' money is used to make the project bigger and better. That's what stretch goals are all about etc.

      There's really something screwy about this situation.. more to than meets the eye.

    Ah but buyer protection does not cover intangible goods ie digital downloads e books etc

    So not sure how PayPal keeping the funds has anything to do with buyer protection?

    The whole concept of crowdsourcing sorta goes against the protection measures that make up Paypal. You are not simply paying for a game when you crowdsource . You are investing into something that may or may-not either fullfill your expectations or fail terribly as a game.
    The funding measures used with stretch goals makes using paypal seem questionable as it is not a direct transfer of money if they step in a hold the devs to account.

    I don't see that paypal has any right whatsoever to hold onto those funds, and I think that as a company it is becoming an increasingly irrelevant sore on the internet.

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