PayPal Strikes Again: Freezes Funds of Yatagarasu Attack on Cataclysm Developers

September 10, 2013 - GamePolitics Staff

Update: A spokesperson for PayPal has informed us that the situation has been resolved. The company's statement can be found below:

"We have reached out to Nyu Media and the issue has been resolved. We want to reiterate that supporting these campaigns is an exciting new part of our business. We are working closely with industry-leaders like IndieGoGo and adapting our processes and policies to better serve the innovative companies that are relying on PayPal and crowd funding campaigns to grow their businesses. We never want to get in the way of innovation, but as a global payments company we must ensure the payments flowing through our system around the world are in compliance with laws and regulations. We understand that the way in which we are complying to these rules can be frustrating in some cases and we've made significant changes in North America to adapt to the unique needs of crowd funding campaigns. We are currently working to roll these improvements out around the world."

Original Story: Once again PayPal is running interference on indie developers trying to get their money raised through the digital payment system. This time out it is the small team behind indie fighting game Yatagarasu Attack on Cataclysm - being developed by three former SNK / King of Fighters developers. After successfully raising $120,000 on crowdsourcing site Indiegogo they have been told by PayPal that they can't have all the money. In an email to the developers PayPal told the team that they could have 50 percent of the funds before the game's release and the rest only after they have provided more proof. In an email to Kotaku the group explained the situation:

"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."

This is the second indie developer we know of that has had funds withheld: the first was the Skullgirls Indie GoGo campaign earlier this year. Only after the developers of that game filed complaints with the Consumer Financial Protection Bureau that PayPal released their money.

Source: Kotaku


Comments

Re: PayPal Strikes Again: Freezes Funds of Yatagarasu Attack ...

Okay folks, here's how PayPal (and the entire financial industry) works:

1)  You have to maintain up to 60 days worth of transactions in any account (not just PayPal) so that the underwriter can fulfill "refund" requests, regardless of source.  Failure to do so can affect a good credit standing.  Bad credit translates to eventual loss of ability (e.g. PayPal could lose its ability to process credit cards).

2)  New accounts or even older accounts that suddenly gain a ton of unusual activity are watched because such activity is frequently associated with crime.  The act of creating a new account is a reason to watch that account.  Leaving insufficient funds in a new account just raises the eyebrow factor even more.

3)  The financial organization has to foot the bill for issues surrounding 1 & 2 if funds aren't available.  FDIC only goes so far.

I have NEVER had a problem with PayPal.  The folks who run into problems and then complain loudly are only doing so because they don't understand how to work with money properly.  Complainants, like this indie group, in nearly all cases, see the money in their account and want to move it right away out of PayPal to some other financial vehicle and THAT is where they run into the problems that you read about.  You have to move money slowly, consistently, and maintain an appropriate balance to stay under the radar and be like most businesses moving money who play by the rules.  Posts like these spread Fear, Uncertainty, and Doubt (FUD) about PayPal.  Every story I've ever read about PayPal being "horrible" involves the complainant doing stupid stuff they shouldn't have done with their account.  Minecraft did the same thing - they broke at least one of the three cardinal rules - and got burned for it.

PayPal is actually consistent with the rest of the financial industry.  If there's a "better" payment system out there, they will eventually, over time, follow the same rules as PayPal.

- Left4Dead Why are zombies always eating brains? I want to see zombies that eat toes for a living. Undead-related pun intended.

Re: PayPal Strikes Again: Freezes Funds of Yatagarasu Attack ...

Interestingly this happens around the time I was considering to purchase the first Yatagaratsu.

Re: PayPal Strikes Again: Freezes Funds of Yatagarasu Attack ...

And with that, the funds are released. IndieGogo doesn't let you link to individual project updates, but it is at the top of the updates page.

http://www.indiegogo.com/projects/yatagarasu-attack-on-cataclysm?c=activity

Even with this news, it has become clear that PayPal has become unreliable. While this project was able to get their funds released thanks to the massive and growing media storm following one that happened just last week, many smaller projects are left to rot.

Re: PayPal Strikes Again: Freezes Funds of Yatagarasu Attack ...

As weird as it sounds, I agree with Sleaker on this: PayPal has been like this for a long time, most likely even way before they froze Minecraft funds 3 years ago.

Re: PayPal Strikes Again: Freezes Funds of Yatagarasu Attack ...

Oh. I know. This has been a big problem for a long time. However, it seems that PayPal is still a dominant player and many people feel compelled to use them despite the negatives. Heck, I even felt like PayPal might have been the only option if I wanted to get the maximum amount of donations to a project. 

It is just that these recent stories have completely killed that line of thought for me. It is time to completely boycott them. 

Re: PayPal Strikes Again: Freezes Funds of Yatagarasu Attack ...

Sadly, these stories keep coming up over and over, and people want to move away from them, but it never seems to work.  They have such a dominant position that any attempt to hurt them really just ends up hurting the boycotter instead.

Re: PayPal Strikes Again: Freezes Funds of Yatagarasu Attack ...

Paypal has been unreliable since it's inception.  Just look at all the stories about paypal doing these kinds of things to normal people.  It's only gaining larger media attention because they are starting to single out indie developers that are actually larger names, and have big followings.

Re: PayPal Strikes Again: Freezes Funds of Yatagarasu Attack ...

In an email to Kotaku the group explained the situation

To be fair, the email was not sent to Kotaku. They found the information via that campaign update. 

http://www.indiegogo.com/projects/yatagarasu-attack-on-cataclysm?c=activity

Re: PayPal Strikes Again: Freezes Funds of Yatagarasu Attack ...

Ok. I refuse to use Paypal from this moment on. 

Amazon Payments seems to be the best option at this point. As far as I am aware, Amazon has not given any Kickstarter project, nor the Humble Bundle, any grief. I have had payments to the Humble Bundle delayed by Amazon on occasion, but those are generally resolved within the day. I haven';t tried using them for any kind of funding program myself though.

Re: PayPal Strikes Again: Freezes Funds of Yatagarasu Attack ...

While PayPal's problems have long been known, one has to wonder whether this will happen with Amazon Payments eventually as well. After all, PayPal is unregulated, and I have to assume that Amazon Payments isn't either, and that to me is the heart of the problem.

Re: PayPal Strikes Again: Freezes Funds of Yatagarasu Attack ...

From my experience, Paypal is terrible, Google Payment, Visa and Amazon are ok and BitCoins are great, with the caveat that exchanging BC for other money or vice-versa is the hardest bit (but the exchange itself is ridiculously simple and easy.)

Re: PayPal Strikes Again: Freezes Funds of Yatagarasu Attack ...

BC also has problems with security and theft. A lot of amateur BC users leave themselves surprisingly open to having their savings stolen if their computer ever gets hacked. This will be a problem until/unless there are regulated BC banks, unfortunately. There's also the issue that the exchange rate of BC is a lot more volatile than most other currencies, so it's hard to price things appropriately. But this as well could improve in time.

Re: PayPal Strikes Again: Freezes Funds of Yatagarasu Attack ...

Hmm, really, most stories of crack and theft were done on big network or through people installing bad malicious wallets. There's no real point to find the wallet of someone if it only contains a couple of BC, has a 64-bit encryption or greater and has the BCs moving regularly. As for the price volatility, it is a problem, but in the last 6-months, 1 year, it has stayed more stable than a couple of European currencies. So, yes, a concern, but...

Re: PayPal Strikes Again: Freezes Funds of Yatagarasu Attack ...

Have you really been that ignorant of their business practices up until now?  I thought it was pretty well known how poorly paypal handled itself.

Re: PayPal Strikes Again: Freezes Funds of Yatagarasu Attack ...

Nope. I have known about their problems for a long time. I rarely used them in the past. However, they were still an "option" for me until now.

Re: PayPal Strikes Again: Freezes Funds of Yatagarasu Attack ...

"Ok. I refuse to use Paypal from this moment on."

Agreed.  I never hear of a story like this being treated with competency and common sense on the part of PayPal customer service.

 
Forgot your password?
Username :
Password :

Poll

What is #GamerGate about?:
 

Be Heard - Contact Your Politician