Paypal tightens rules on crowdfunding

Paypal will stop protecting payments made to crowdfunding projects in several countries, the online money transfer platform has announced.

Countries affected include Brazil, the US, Canada and Japan but not the UK.

The firm is amending its Payment Protection policy in line with the investment risks and could not confirm if it would be rolled out further.

It is also withdrawing protection for gambling transactions and payments made to government agencies.

"This is consistent with the risks and uncertainties involved in contributing to crowdfunding campaigns, which do not guarantee a return for the investment made in these types of campaigns," the firm said.

An independent study into the crowdfunding site Kickstarter, carried out by the University of Pennsylvania, found that 9% of projects listed on the site "failed to deliver rewards".

The study also found that smaller projects - those seeking $1000 (£693) or less - were the most likely to fail, but that 73% of the investors who took part said they would not be put off investing in another project if one failed.

"We want everyone to understand exactly how Kickstarter works — that it's not a store," Kickstarter said.

"Amid creativity and innovation there is risk and failure."

Kickstarter does not accept payments via PayPal.

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