I think it's sketchy, but their logic sort of makes sense.
Basically, they are terrified of chargebacks. If we spend all the money and don't deliver and everyone chargebacks, Paypal is concerned they will be on the line for it.
So they are effectively treating it as a loan. I mean, the guy flat-out said, "Until the threat of chargebacks has passed, Paypal is effectively financing your development."
This is bullshit. Paypal under no circumstances is a creditor. Even their credit card service is handled by a completely different entity.
They aren't effectively financing your development that was the donators. Paypal is just a middleman to transfer the money like Western Union.
Don't fall for their bullshit. When I worked for a company that was dealing with them for ebay transactions they were always a pain in the ass.
It's unfortunate they are trying to hold you up for a year on this and I'm only assuming they are doing this because this was done through Indiegogo. Chargeback period for ebay transactions is 60 days tops. If a customer makes a chargeback after that time period its denied.
Whee! Paypal's freeze on our account is making it so that I can't pay people today.
I am pretty fucking pissed. I sent them all the documentation they asked for last night, hoping it would be resolved today, but didn't hear anything back.
...I also immediately filed a complaint with the CFPB because this whole thing seems decidedly non-kosher.
What they are threatening to do and their justifications aren't aboveboard. Good on you being on your toes with this.
Is it too late to get on the Minette bandwagon?