Report: Paypal Withholds Crowdfunded Payments For The Universim


Update 7:36 PM CST 5/15/2015

On June 13, 2014 a minimum reserve of $1 million was placed on the Crytivo Games PayPal account. This means 100% of their funds will be inaccessible until their account reaches a balance of $1,000,000.00 USD.

“During all this time we had ZERO chargebacks via PayPal. So far they’re [freezing] any accounts that have any kinda relationship with Crytivo Games.” a spokesman for the studio explained.

PayPal places these minimum reserves on a case-by-case basis, so it is unlikely that this high reserve was a mistake. To make things even harder, once a reserve is placed on an account it’s a long and sometimes impossible task to have it removed.

This is explained on the PayPal website:

"“If your account has a reserve, PayPal will re-evaluate your account periodically to determine whether the reserve should be changed. Preventing reserves isn’t always possible, and depending on your industry, credit history and other factors, you might never be able to fully remove a reserve from your account.”"

Original Story 5/15/2015

Crytivo Games, the studio behind the successfully funded god-game “The Universim” have taken to Twitter in an attempt to break PayPal’s silence and access their pledged funds. According to a string of tweets the game studio can’t access a bulk of its PayPal funds, and the company is unresponsive to their support requests.

Many crowdfunded campaigns open up additional payment avenues to give potential backers merchant options other than Amazon. Often times that avenue is PayPal, but the eBay-owned payment service has a rocky history when it comes to crowdfunded games. Back in 2013, Giant Bomb published a feature highlighting the woes several developers faced when interacting with PayPal, but the article never made it to the eyes of Crytivo Games.

According to the developer’s Twitter account PayPal initially wanted to hold the money for 6 months, but that has proved untrue. The Universim ended its funding May 24, 2014 and after nearly a year PayPal still isn’t budging.

Cases like this one are well worth discussing, but the withholding of funds is nothing new to PayPal. The company typically holds payments for up to 21 days or more as explained on their site. This measure is a means to protect both PayPal and the consumer from getting ripped off by unsavory sellers. Here’s their official explanation:

"“Delaying the availability of payments for a specified amount of time is a common practice in the payments industry. Delaying access to payments helps make sure that sellers have enough money in their account to cover claims or refunds.”"

When you buy a finished product this is a reasonable amount of time to ensure the customer is satisfied, but when they’re buying a promise that may take years to fulfill, things get murky.

PayPal doesn’t like the risk of crowdfunded projects, and it’s a justified fear given countless funded projects that have ended in disaster. If upset backers want their money refunded they’ll be looking to PayPal to get it back. That potential scenario causes the company to withhold funds for in-development products for extended periods of time. In some cases the company is even acting in a producer-like role, slowly doling out funds as progress is made.

The Universim raised $387,345 on Kickstarter, and gathered an extra $12,123 from PayPal pledges. These separate pledges account for only 3% of the total money raised so this isn’t likely to derail the project. But money is money and Crytivo Games is going to need it at some point. We’ll keep following this story and update it accordingly.

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