PayPal Class Action Says Charitable Giving Fund Redirects Donations

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Plaintiffs in a PayPal class action lawsuit say PayPal Giving Fund fails to deliver charitable donations according to the donor’s express intentions.

Plaintiffs Terry Kass says she tried to make a donation to her co-plaintiff Friends for Health: Supporting the North Shore Health Center using a charitable donation platform set up by defendants PayPal and PayPal Charitable Giving Fund. But Friends for Health says it never received Kass’ donation.

According to this class action lawsuit, PayPal set up its platform for charitable donations in 2013 to give consumers an easy way to donate to the charities of their choice. This platform processes and disburses donated funds through the PayPal Giving Fund. The fund’s website provides a database of charities that donors can contribute to.

But the plaintiffs say flaws in the PayPal Giving Fund platform combine to prevent donations from reaching their intended recipients.

According to the plaintiffs, charities must be registered with PayPal Giving Fund to receive money donated through PayPal. Yet unregistered charities are listed in the PayPal Giving Fund database as potential donation recipients.

These unregistered charities receive no notice from PayPal Giving Fund when a donation is made in their name, the plaintiffs say. Once six months go by and the donated funds are still unclaimed, PayPal allegedly distributes them to charities of its own choosing – without regard for the original donor’s intention.

Because of the alleged flaws in the PayPal Giving Fund platform, plaintiffs say that tens of thousands of potential Class Members made donations that never made it to their intended charities.

The plaintiffs propose multiple Classes to represent both donors and charities. Kass proposes to represent a Class consisting of all persons in the U.S. who donated money through the PayPal Giving Fund platform to an unregistered organization, and whose donation was delayed or never reached the intended party.

Friends for Health proposes two Classes to represent charities. The Undelivered Funds Class would cover all organizations in the U.S. who are not registered with PayPal Giving Fund but to whom a donation was made through the fund’s platform. The False Affiliation Class would cover all U.S. organizations whose names or marks appear in PayPal’s giving platform but who are not registered with PayPal Giving Fund.

Among other requested remedies, the plaintiffs seek an injunction barring PayPal Giving Fund from continuing the conduct complained of. They also want PayPal Giving Fund to conduct a complete accounting of all funds donated in the name of members of the Undelivered Funds Class, and to provide the names of all donors who did not request to remain anonymous.

They also seek awards of treble, statutory and punitive damages, with pre- and post-judgment interest, plus reimbursement of court costs and attorneys’ fees.

Kass and Friends for Health are represented by attorneys Benjamin H. Richman, Jay Edelson, Christopher L. Dore and Ari J. Scharg of Edelson PC, and Michael H. Moirano and Claire Gorman Kenny of Moirano Gorman Kenny LLC.

The PayPal Giving Fund Misdirected Donations Class Action Lawsuit is Terry Kass, et al. v. PayPal Inc., et al., Case No. 1:17-cv-01542, in the U.S. District Court for the Northern District of Illinois.

UPDATE: On June 12, 2018, an Illinois federal judge ordered several charities to pursue their claims against PayPal Inc.’s charitable giving platform in arbitration instead of a class action lawsuit, ruling that they are bound by an arbitration clause they agreed to when they created accounts.