Confirmed victory

PayPal: Separate Tips From Payments

This petition made change with 2,804 supporters!

This petition is being created because an entire industry is being drastically impacted by outdated policies at PayPal (PayPal Holdings Inc.) and the hope is that by making our voice heard in this one space, PayPal recognizes our concerns and enacts change in our favour. PayPal's provided methods for feedback have not seen any results.

The issue: PayPal has no policy, practice or distinction in place for tips verses payments for services and goods. The consequences include the loss of tip income plus unfair chargeback fees to hard working people who may not be able to pay their monthly bills or even lose their career or business due to this.

I am part of a rapidly growing industry of online broadcasters and entertainers. This work can be full time, part time or a hobby, producing art or music, entertaining through comedy or podcasts, playing video games and more. A multitude of people around the world are providing this type of entertainment, from everyday people like you and I, to celebrities and corporations, teachers and students, non-profit organizations, friends and family. Millions of people enjoy live entertainment streamed over the internet and many use it as their sole daily entertainment.

Those of us who choose this career of online broadcasting and entertaining do so through various website platforms. Money to sustain this career and support ourselves may come from subscription fees by the site's users, through shared advertising revenue, by sponsorship from companies and also by tips given to us by generous people who want to support the broadcaster/entertainer.

One of the only ways to receive tips electronically is through PayPal.

If a person wants to tip me, for example, there is a link on my live-stream page where a viewer clicks, are presented with a warning about tips being non-refundable and other important information, a place to put the amount, their name and a message if they choose, and then they are taken to PayPal to process their tip. The money arrives in my PayPal account, after PayPal takes a fee (which is not in dispute, it's a service we are paying for).

PayPal's service is not only useful and an industry best-practice, it's virtually required as there is no other secure way to transfer funds online in this manner.

The issue arises when the person who tipped decides to take the money back. This is referred to by PayPal as a chargeback. Chargebacks can occur for a number of reasons online, including not receiving a product or service.

During a chargeback, the person who received the money has the money taken back out of their PayPal account by PayPal whether the money is available or not (which can lead to a negative balance which must be paid back to PayPal). On top of this, PayPal adds a 'chargeback' fee of $20-$40 USD per chargeback.

I have been subject to this situation, as have so many in the online broadcasting and entertainment industry. Here is how serious the situation can be. I received over $1000 USD (broken up into 3 different tips) from a person who enjoyed my broadcast. This is a large amount, but not uncommon. Due to PayPal's policy allowing chargebacks up to 90 days, months later this person submits a request to get their money back. Remember that this is a tip, not a payment. PayPal then takes $1000 USD from my account. I had less than that in my PayPal account. I then had a negative balance. I disputed the chargebacks, yet, even with proof that it was a tip, PayPal sides with person who did the chargeback. PayPal then charges me $20 USD per chargeback. There were 3. In the end, I had already spent the $1000 on rent months before. I had to find $1000 plus $60 to give to PayPal, when I was already trying to save for that month's bills.

Here are the issues with how PayPal manages this situation:

  • PayPal sees every transaction as money for goods or service. This was a tip, not money for goods or a service. A tip is a gift and not something you can take back at all.
  • It is often times clearly stated by the broadcaster/entertainer, as a method of protection, that the tip is non-refundable, yet PayPal does not honour these statements as enough proof that the money should stay with the recipient of the tip.
  • PayPal takes the money back before reviewing the situation. This leaves the broadcaster/entertainer in a difficult position. Financial planning when involved in this self-employed industry is paramount, yet we are left wondering if the money is really ours for up to 90 days. In some cases, the PayPal balance goes in the negative when money is taken back out by PayPal, requiring paying PayPal back funds that may not exist anywhere else.
  • PayPal charges the original recipient of the money $20-$40 PER chargeback. I have heard of people tipping $1 over 20 times and then doing a chargeback for each one. That would theoretically be over $400 for PayPal for nothing and a huge problem for someone living month to month.
  • PayPal allows chargebacks up to 90 days after the transaction. Anyone that relies on their tips as part of their income cannot possibly hold the money 90 days hoping that someone doesn't do a chargeback.
  • The outdated PayPal policies, which do not take into account online tipping, allows for situations of abuse by people who are aware of how chargebacks work and are able to effectively scam, and cause massive problems for, the online broadcaster/entertainer.

If someone gave a street-performer or wait-staff in a restaurant a tip and then 89 days later came back and took their tip back, we'd call it theft or fraud and the police would be involved. Shouldn't taking tips back on the internet be seen as the same situation? A tip is not a payment, it's a gift.

If PayPal continues with these outdated policies and procedures, the online broadcast and entertainment industry and the livelihood of many will continue to be in threat. I know of people who have had to abandon their careers because of excessive tip take-backs and charges through PayPal.

We are calling on PayPal to realize that their service is being used by an extremely large group of people who pay a large amount in transaction fees every day who need this change so we can finally provide top-quality entertainment without worrying about our tips being ripped from our accounts and charged for the inconvenience on top of it up to months later.

Please sign this petition and help us raise our voice about this important issue impacting so many people around the world.

#FixPayPal on social media.

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