A Highland Park charity and a donor are accusing PayPal of
illegally withholding and redirecting donations intended to benefit certain charities
in a class action complaint filed Feb. 28 in Chicago federal court.
Plaintiff Terry Kass, of Illinois, said she attempted to use
PayPal Charitable Giving Fund to donate $3,250 to 13 local and national
charities, including the organization known as Friends For Health: Supporting
the North Shore Health Center. Friends for Health is also a named plaintiff in
Although PayPal had profile pages on its giving platform for
all 13 of the charities Kass said she
donated to, the complaint said Paypal only allowed contributions to the three
actually registered with PayPal, meaning PayPal withheld $3,150 from going to
the 10 non-registered organizations.
“On its face, PayPal Giving Fund is an admirable endeavor,”
the complaint states, noting PayPal launched launched the platform in 2013.
“However, in practice, it falls woefully short of that mission on numerous
By listing charities on the website that are not registered
to receive donations through the Fund, and failing to inform donors those
listed charities will not receive their contributions, or to notify the
charities that donations have been made, “tens of thousands of generous
individuals, after placing their trust in PayPal, have made donations, that,
unbeknownst to them, have never reached their chosen charity. Likewise,
thousands of charities have been deprived of much needed funds they never knew
were even intended for them.”
Further, the complaint alleges PayPal has taken donations
made to unregistered charities and directed the money to organizations of its
choice, without notifying the donors or intended recipients. This occurred, the
lawsuit alleges, despite a website that purportedly “repeatedly promises its
customers — in no uncertain terms — that 100 percent of their donations will go
to whichever charity they choose within the PayPal giving platform” and email
solicitations promising to add 1 percent to each donation. The lawsuit said
Paypal also sent email confirmations of donations given to specific charitable
The complaint said charities can only receive donations if
they have both a PayPal business account and a separate Giving Fund account. While
common practice for many large organizations, the complaint said “hundreds of
thousands of smaller charities (those that have the hardest time fundraising)
have not.” The complaint includes screenshots from Giving Fund web pages, and
notes that while PayPal advertises the ability to donate to more than 1 million
charities, 2015 securities filings showed only 29,000 had registered Giving
The complaint seeks to establish a class for donors, a second
class for agencies that can demonstrate undelivered funds and a third that can
argue false affiliation, should a court agree PayPal used names, trademarks and
likenesses without consent.
Formal allegations include violation of the Lanham Act’s
intellectual property statutes, conversion, unjust enrichment, accounting standards
and the Washington, D.C., Consumer Protection Procedures Act, as PayPal Giving
Fund’s headquarters are in the District of Columbia.
In addition to a jury trial and class certification, the
complaint asks the court to declare all donations rightfully belong to the
charities donors designated as recipients, and to declare Kass and all donor
class members should be able to claim those donations on their state and
federal tax returns.
Plaintiffs also ask the court to order a full, complete
accounting of all relevant transactions and to force PayPal to provide the
names of each donor who did not request anonymity, along with the amount of
their donation and intended recipient.
The complaint seeks injunctive and equitable relief as well
as actual, treble, punitive and statutory damages and restitution, with
interest and attorney fees.
Representing Kass and Friends For Health and the putative
class are lawyers from Edelson PC, Chicago, and Moirano Gorman Kenny LLC, also