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Paypal drops financial protections for failed crowdfunders

Paypal will stop protecting crowdfunding payments as of 25 June in a number of key markets.

Amid the news that around nine per cent of all backed Kickstarter projects fail to deliver rewards, Paypal is moving to drop its buyer's protection from select transactions in Brazil, the US, Canada and Japan.

It comes as it ceases to reimburse or retrieve funds paid in gambling and government agencies.

Paypal said: “This is consistent with the risks and uncertainties involved in contributing to crowdfunding campaigns, which do not guarantee a return for the investment made in these types of campaigns."

On crowdfunding failures, eight per cent of contributions entered failed Kickstarter projects. Of the failures, a refund is issued 13 per cent of the time.