A class action lawsuit filed Tuesday in Chicago against PayPal takes issue with the way the company handles charitable donations given to the PayPal Giving Fund.
Participants in the suit allege PayPal is misleading users who give money to a particular charity, then find out months or years later that the charity never got the funds, The New York Times reported.
At issue seems to be a list on the Giving Fund website of charities that can receive the money. However, if the charity doesn’t register with both PayPal and the Giving Fund site, it can’t receive the donations — and then PayPal sends the donations to a different charity without informing the person who donated, the Times reported.
Lead plaintiff Terry Kass said she selected 13 charities on the Giving Fund site and gave more than $3,000 in donations, but later found out 10 of the 13 didn’t receive her donations. PayPal withheld $3,150 of her donations, Fortune reported, but sent Kass tax receipts saying the money had gone to her selected recipients.
PayPal gives charities six months to claim the funds; if funds are not claimed, they are given to other charities instead. Kass claims, however, that charities aren’t notified that they need to create accounts with PayPal and the Giving Fund, Fortune said.
A spokesperson for PayPal said the company it is prepared to defend itself in the case.
“PayPal only recently became aware of this filing and we are reviewing the contents. PayPal and PayPal Giving Fund foster positive change and significant social impact by connecting donors and charities,” the spokesperson said, Fortune reported.
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