Despite amassing $829,049 from its IndieGoGo crowd funding campaign, Skullgirls developer Lab Zero Games was not able to pay its employees after PayPal decided not to hand them their money.
"Paypal's freeze on our account is making it so that I can't pay people today," wrote Lab Zero CEO Peter Batholow on NeoGAF. "I am pretty f**king pissed. I sent them all the documentation they asked for last night, hoping it would be resolved today, but didn't hear anything back. I also immediately filed a complaint with the [Consumer Financial Protection Bureau] because this whole thing seems decidedly non-kosher."
PayPayl froze the account because they feared a large number of chargebacks if backers didn’t get their favorite character in the final DLC roster which is being voted on Skullgirls’ Facebook page.
Batholow contacted developers at inXile - who successfully funded Wasteland 2 and Torment: Tides of Numenera through Kickstarter - and they confirmed that Amazon Payments did not have the same issues as PayPal.
During the negotiations, PayPal asked Lab Zero Games to take on the risk if a large number of backers asked for chargebacks. "They also asked if we're good for the $700,000 if something goes wrong. I said 'No,' because, well we're not?" Batholow wrote. "The whole point of crowdfunding is to give us the money to develop stuff, not take out a loan."
In the end PayPal unfroze the account but held $35000 as collateral.
"Paypal called me today to inform me that the restrictions on my account had been lifted, so I can get back to paying our contractors today," said Bartholow. "I think this is still pretty sketchy and have filed a complaint with the Consumer Financial Protection Bureau, so hopefully that will become unrestricted in the near future. But now that we have unrestricted transfers on Paypal again, we shouldn't need that money anytime soon if they can't be convinced to release it."
