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Today, a bipartisan coalition of Attorneys General, led by General Hector Balderas (New Mexico), Lynn Fitch (Mississippi), General Jeff Landry (LA), wrote GoFundMe to urge better disclosure policies and greater clarity in terms of service for consumers who use their platform.
“Crowdfunding platforms are full of opportunity for helping individuals make big impacts in the world around them,” said Attorney General Lynn Fitch. “But these platforms have a responsibility to ensure that the wishes of the users and the donors are carried out true to their intentions. Being transparent about their policies is crucial and we will hold them accountable where they fail to be fair and open in their transactions.”
GoFundMe has become a popular crowdfunding platform. According to their website, they’ve served over 50 million donors and helped organizers raise more than $5 billion since its launch in 2010. Individuals, businesses, and charities pay a fee of 2.2-2.9%, plus $0.3 per transaction. But information on the terms of service and policies, particularly related to blocking, freezing, refunding, and re-directing donations, is hard to find and unclear.
As the Attorneys General state in their letter, “[P]latforms like GoFundMe are not and should not be empowered to unilaterally make decisions regarding where donated funds will go or why. If GoFundMe is making opaque and unilateral decisions about which fundraisers are legitimate and which fundraisers to re-route donations to irrespective of initial donor choice, GoFundMe has likely crossed the line from fundraising platform to fundraiser itself. Such a role implicates significantly different regulatory schemes directed at ensuring transparency in charitable giving.”
The Attorneys General ask GoFundMe to take the following steps and information in response to their letter:
1. Explain in detail how GoFundMe investigates or analyzes fundraisers on its platform, and what criteria GoFundMe uses to determine whether those fundraisers are fundraising for acceptable purposes or not;
2. Explain in detail how GoFundMe determines whether to block, freeze, re-direct, or refund donations, and what criteria GoFundMe uses to decide which avenue to take;
3. Explain in detail how GoFundMe handles donations when GoFundMe decides to (i) block donations, (ii) freeze donations, (iii) re-direct donations, and/or (iv) re-direct donations;
4. Review your policies and Terms of Service to ensure that donors are adequately and conspicuously informed at the time of their donation of the circumstances under which their donation may be blocked, frozen, re-directed or refunded without their authorization by conspicuously disclosing those circumstances through the user interface on your platform;
5. Explain in detail the meaning of the term “unacceptable” in the context of your Terms of Service and describe whether there are additional internal policies defining it; and
6. Articulate any steps being taken to address these issues in the form of a responsive letter or a meeting with the undersigned attorneys general.
The letter was signed by the Attorneys General of Louisiana, Mississippi, New Mexico, Alaska, Arizona, Arkansas, Florida, Georgia, Guam, Indiana, Kansas, Kentucky, Michigan, Missouri, Montana, Nebraska, Nevada, New Hampshire, North Dakota, Northern Mariana Islands, Oklahoma, South Carolina, South Dakota, Texas, Utah, U.S. Virgin Islands, Virginia, and West Virginia.
A copy of the letter is here.
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