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Lab Zero's PayPal account frozen due to fear of chargebacks - will not delay content as a result

Posted by Steven 'Dreamking23' Chavez • April 20, 2013 at 6:36 p.m. PDT • Comments: 104
Lab Zero's PayPal account frozen due to fear of chargebacks - will not delay content as a result Ravidrath over at Lab Zero Games has been quite active lately on the NeoGAF forums. Throughout multiple posts he shared that PayPal has currently frozen Lab Zero's account with them due to the fear of chargebacks.

It seems as though PayPal is worried that if Lab Zero does not deliver what they promised from their recent Kick Starter campaign, those who donated will demand their money back. Check out one of the posts from Ravidrath below.
I don't understand... why? Is this seriously because people wanted their money back when their voted character didn't make it into the final rounds of voting?

I think it's sketchy, but their logic sort of makes sense.

Basically, they are terrified of chargebacks. If we spend all the money and don't deliver and everyone chargebacks, Paypal is concerned they will be on the line for it. So they are effectively treating it as a loan. I mean, the guy flat-out said, "Until the threat of chargebacks has passed, Paypal is effectively financing your development."

They also asked if we're good for the $700,000 if something goes wrong. I said "No," because, well... we're not? The whole point of crowdfunding is to give us the money to develop stuff, not take out a loan.
When asked about PayPal chargeback time limits, Ravidrath mentioned that although it can take a year for these situations to pass, nothing will be delayed as a result.

Is there a time limit on chargebacks? If so, perhaps it would have been best to hold off the 2nd- vote until that limit has passed.

Depending on the card provider, chargebacks are a threat for a year. So... yeah, not delaying anything for that.

Via NeoGAF. Tip by mab4.
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