Paypal Holdings Inc (NASDAQ:PYPL) is faced with a federal class action law suit for failure to submit charity donations sent through their Giving Fund platform. The law suit claims that donations sent through Paypal may never reach their intended recipients.

The suit alleges that Paypal continues to receive donations on behalf of charitable accounts with set up defects. Paypal does not in any way inform donors and the non profits of the error. It continues to receive the money and after six months it redirects the money to another charity. This is irregardless of the beliefs, intentions and desires of the respective donor. The law suit awaits the certification of the judge.

Paypal’s defense

Paypal has defended itself through their spokesperson. He claimed that when a donation comes through for a charity not registered with them, Paypal not only notifies the organization but they also go through the trouble of guiding them through the enrollment process. The spokesperson added that the Paypal and Paypal Giving Fund have a long reputable record of fostering undeniable social impact by acting as the link between donors and charities across the world.

Charities ought to have two accounts to receive donations

According to the website, Paypal receives over $35 million in donations per year. They ensure that as many as possible, charities organizations benefit from the global donations campaigns organized by the company. They further explained that charities ought to have 2 accounts to be able to receive donations; a business account and a giving fund account. It has a list of charity groups in its trusted recipient database but that does not mean they are all capable of receiving donations through Paypal Giving Fund platform.

The allegations against Paypal

A plaintiff claims that she donated an amount of $3,250 through Paypal Giving Fund platform in the December donations campaign. The funds were meant to be distributed to 13 different charity organizations. Only $100 was distributed to 3 charity groups in her listed choices. The rest of the money remains with Paypal. However, Paypal refutes the allegation and expresses its disappointment stating that it is ready to defend itself with this issue.


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