Letter: Do Not Donate To Charity Through PayPal!

Based on PayPal's own admission, I believe that they have set up a fraudulent charity scheme (PayPal Giving Fund) in order to steal funds intended for charitable organizations

Unlike most payments made through PayPal, charitable donations are uniquely convenient for a payment processor like PayPal to steal because, at least in most cases, the charity is not expecting that specific donation, nor is the donor expecting anything in return. So, when the donor pays PayPal and PayPal keeps the funds, it is unlikely that either party (charity or donor) will ever know.

So, you might ask, how did I find out about the fraud? Between the years of 2019-2023, I attempted to donate a total of $4,304.35 to six different charities through PayPal.

On April 4, 2024, I was notified by PayPal via email that there was a problem with a single donation of $235.78 intended to go to War Child USA. In accordance with PayPal's “Donation Delivery Policy,” they said that I had two weeks to decide upon an alternate charity, and that if I did not respond within that time, PayPal would designate a charity of their choice.

PayPal's terms state that donations are processed from PayPal to the intended charity “[...]in nearly all cases within 10 to 40 days after PayPal Giving Fund's receipt of funds.” In this case, PayPal held the $235.78 donation for 257 days before notifying me of an issue. I wanted to know why I was not notified sooner, and I also wanted to designate an alternate charity.

I called PayPal the same day I received the email and was told by a PayPal representative that the email in question was fraudulent and to disregard it, as the funds had already been sent to War Child as intended. Given that information, there was no reason for me to designate an alternate charity.

Some time later, I received an unrelated email from PayPal that I had questions about. I called PayPal, and was again given the same answer: the email was fraudulent and should be disregarded. I expressed frustration at the fact that PayPal seemed to be denying involvement in any email they didn't wish to speak about. I referred to the earlier charity email, and the representative refused to discuss it.

This led to a complaint against PayPal with the Better Business Bureau, which ultimately led to a response from PayPal's Paula Dawn, a “Global Customer Complaints & Advocacy” representative. Ms. Dawn stated (in part), “Regarding your donation to War Child, I have carefully searched our payment records and transaction history, but I could not find any evidence of a completed payment being sent to them.”

Up until that time, I thought the only thing in question was a single donation of $235.78 intended for War Child. Given that fact, there was no reason for me to mention that there were a total of 14 donations intended for War Child, totaling $1,118.29. Now, Ms. Dawn was claiming that NO donation was sent to War Child.

I replied to Ms. Dawn to ask if any of the other five charities received the donations I made, and she refused to address that question, instead telling me to check my PayPal transaction history.

The problem with that recommendation is that my transaction history only details payments I made to PayPal Giving Fund, not what PayPal did with the money after that point. It also seemed reasonable to assume that if the funds had been handled properly, Ms. Dawn would have simply said so.

I decided that this issue was significant enough to warrant a formal dispute. I sent PayPal their completed “Notice of Dispute” form via certified mail, as the first step towards a resolution, and, if necessary, arbitration. Despite confirmation that the certified mail document was received, PayPal failed to respond to the dispute.

I ended up opening an arbitration case against PayPal, and of course, once the lawyers got involved, PayPal denied all wrongdoing. They stated that Paula Dawn was a low-level employee with no knowledge, no access to documentation, and no knowledge that she had no access to documentation.

PayPal provided self-generated spreadsheets claiming that they processed all donations properly, with the exception of the $235.78 donation which they instead claimed to have donated to Heifer International since (according to their false statement) I did not respond to the email.

To be clear, the email they claim I did not respond to is the same email they previously stated was fraudulent and should be ignored, and now, they were using it as a formal exhibit in a legal dispute.

PayPal's lawyers repeatedly referenced “yearly external audits” on the self-generated documents they submitted as “proof” that the donations were made. They also mentioned their ability to subpoena bank records proving the financial transfers. However, no evidence of the audits or bank records was ever provided.

In the end, the arbitrator sided with PayPal for the majority of the case, despite PayPal providing only their own self-generated documents (absent any third-party verification) which directly conflicted with their prior statements.

However, the arbitrator did find that PayPal violated the Pennsylvania Unfair Trade Practices and Consumer Protection Act, 73 P.S. 201-1 when they falsely claimed that the email was fraudulent and that the $235.78 was already successfully donated to War Child, thus preventing my re-designation of the donation. 

Given this finding, the arbitrator required that PayPal donate the $235.78 to a charity of my choice. Unfortunately, the only thing required of PayPal was that they provide another self-generated document claiming they made such a donation within 15 days of my designation.

While PayPal did provide me with that document, I still have strong doubts that much, if any, of the money was actually given to the charities in question.

When a company admits to wrongdoing, then denies such wrongdoing only once a formal dispute is opened and lawyers get involved, absent any actual verifiable proof to the contrary, it is not reasonable to accept the denial of the wrongdoing.

Based on the information above, I would strongly recommend that donors not contribute to charities through PayPal including (but not limited to) the PayPal Giving Fund. Instead, donate to the charity directly through the charity's website, mailing address, phone number, etc.

~Troy Tyson

Editor's Note: the opinions expressed above are those of the letter writer, edited by Value Added Resource for formatting and clarity only.