Like a few other game developers who have crowdsourced a project or made a lot of money through PayPal transactions, Skullgirls developer Lab Zero Games found themselves unable to pay employees during the weekend because the online money transfer service froze the developer's account. According to several posts from CEO Peter Bartholow on NeoGAF, Paypal froze its account in anticipation of a large number of chargeback requests related to its recent Indiegogo crowdfunding campaign to add new characters to the game as DLC.
"PayPal's freeze on our account is making it so that I can't pay people today," he wrote. "I sent them all the documentation they asked for last night, hoping it would be resolved today, but didn't hear anything back," he added. "I also immediately filed a complaint with the [Consumer Financial Protection Bureau] because this whole thing seems decidedly non-kosher."
Bartholow also said that he spoke to the team at inXile, who told him that backing through Amazon Payments had "no similar issues, despite dumping several times the amount we have into their bank accounts."
PayPal also asked Lab Zero to shoulder the risk of charge-backs, but Bartholow declined and they froze the account.
"They also asked if we're good for the $700,000 if something goes wrong," he wrote. "I said 'No,' because, well we're not? The whole point of crowdfunding is to give us the money to develop stuff, not take out a loan."
While PayPal finally unfroze the account, it kept $35,000 "as collateral," says Bartholow.