A federal class action lawsuit has been filed in Chicago and it alleges that donations made via PayPal’s Giving Fund platform may never reach the intended charities. PayPal claims its charitable platform raised more than $7 billion last year. Giving Fund enables individuals to make donations to “over a million charities” but the lawsuit alleges that only a fraction of those charities actually see any money because they’re not registered with PayPal. It further adds that donations made to non-registered charities are held by PayPal for six months before they’re transferred to other not-for-profit organizations.

The lawsuit details the experience of Illinois resident Terry Kass who used PayPal to donate $3,250 to 13 local and national charities late last year. She got an email from PayPal which promised an additional 1 percent donation from the company if she used the Giving Fund platform. She found a special PayPal page for each of the charities that she wanted to donate to and the sites promised that 100 percent of the donation would go to the chosen charities.

However, after making the donations, Kass found out from an employee of a legal aid clinic that she gave money to that her donation was not received. She took it up with PayPal and found that 10 out of the 13 charities she gave money to were not registered with the PayPal Giving Fund.

One of the attorneys who brought the lawsuit on behalf of Terry Kass the North Shore Health Center says “We have no idea where the money is going” and that the plaintiffs are trying to “just get the money where it’s supposed to go.”

A spokesman for the company says that PayPal only recently became aware of this lawsuit and it’s currently reviewing the contents. “PayPal and PayPal Giving Fund foster positive change and significant social impact by connecting donors and charities. We are fully prepared to defend ourselves in this matter,” the spokesman added.

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