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Ohio part of multistate settlement with PayPal fund
KEITH ARNOLD
Special to the Legal News
Published: January 28, 2020
Regulators from 22 states and the District of Columbia have determined the charitable leg of international online payment system PayPal had not been acting as transparently as it should.
Ohio Attorney General Dave Yost last week announced the state's inclusion in an agreement with PayPal Charitable Giving Fund, requiring the organization to boost transparency for donors on its online fundraising platform.
"Mixing secrecy with charity hardens the hearts of would-be donors," Yost said in a prepared statement. "This promise of transparency means donors will now have the information they need to guide their giving."
Users of the platform pay money electronically to the giving fund, which aggregates the donations and distributes them to charities selected by each donor.
In some cases, however, the giving fund redirected contributions from selected charities to other organizations with similar purposes without telling donors, a press release detailed.
The organization also failed to disclose adequately that charities that have PayPal accounts can receive donations faster than those that do not.
State attorneys general, secretaries of state, and consumer protection agencies nationwide joined the effort to investigate the organization's fundraising activities, including its disclosures, vetting practices and treatment of charitable contributions.
The multistate inquiry included three in-person meetings between representatives of the giving fund and regulators, summary of the case provided.
The states, through the Nebraska attorney general's office, issued a civil investigative demand and subpoena to the organization which provided responses and a rolling production of documents.
The summary noted that the giving fund cooperated fully with state investigators requests.
Although the PayPal charitable leg denied any liability based on the allegations, in order to avoid the time and expense of litigating the matter, the organization agreed to settle the matter.
To address the states' concerns, PayPal's giving fund agreed to reform its disclosures to ensure that donors know:
• That they are contributing to the organization;
• The timeframe in which a selected charity can receive funds from the giving fund; and
• The implication of being an enrolled charity rather than an unenrolled charity on the organization's platform.
Additionally, the organization agreed to notify donors when it redirects charitable contributions to organizations other than those they selected.
The giving fund is expected to provide regulators with future campaign data to ensure the organization is complying with its obligations under the agreement.
The organization also agreed to pay $200,000 to the National Association of Attorneys General for deposit into the group's Charities Enforcement and Training Fund.
The fund was established to defray costs associated with the investigation and litigation of cases brought by state charities regulators and to provide training and education to those regulators, the press release provided.
States and territories participating in the settlement include Arkansas, Colorado, Connecticut, District of Columbia, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Nebraska, Nevada, New Hampshire, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Texas and Wisconsin.
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