Call of Cthulhu's Sandy Petersen Sues Paypal Over Withheld Funds [UPDATED]

[UPDATED!] Sandy Petersen, author of Call of Cthulhu, is suing PayPal. He claims that PayPal has withheld over $57,000 raised via Kickstarter for a (video game) project in 2013. You can read the full 8-page filing here. "To date, however, defendants wrongfully refuse to release the funds that plaintiff’s customers attempted to pay and/or pledge to plaintiff, despite the fact that plaintiff has already sent the purchased/requested productions to many of these customers. In fact, defendants have acknowledged in writing that the records plaintiff provided show the plaintiff has fulfilled purchase orders of PayPal customers in the amount of at least $22,675.00. Defendants still refuse, however, to release even these funds." The case was filed in Dallas, Texas.

This isn't Petersen's most successful Kickstarter campaign -- he recently raised over $1M for the Cthulhu Wars: Onslaught Two horror game, and The Gods War board game which raised well over half a million dollars.

As the filing mentions, the amount Petersen asserts is being withheld by PayPal is $57.702.66. Petersen says he has provided shipping records which prove that 22,765 of product has been already shipped to backers, and that PayPal has refused to release the funds for over six months now. Petersen is asserting his right to a trial by jury.

Petersen is currently the Vice President of the Board of Directors of Chaosium (he and Greg Stafford returned to Chaosium in 2015)as well as president and chief designer at Petersen Entertainment.

UPDATE! I've heard from Ian Starcher, Business Manager at Petersen Games, who says he'll send some more information after the holidays but as a quick answer: "PayPal (out of the blue) froze/took 57k of Petersen Games money from ALL sources of income. Kickstarter, our website, etc."

It's the New Year, and Ian has sent a slightly longer update:

"PayPal held $57,000 from Petersen Games unlawfully and without giving a reason other than "risk to PayPal”. We have zero history of issues previously with PayPal in any fashion. They withheld money from our Kickstarter, from our website sales, basically any place we allowed our customers to pay us via PayPal.

We jumped through all the hoops they asked us to so we could show we shipped, etc. so that they’d pay us our money. It cost us thousands of dollars in extra staff expense just to go through all the hoops they said we’d have to get paid.

They still won't give us any of our money, giving the same vague non-answer. So we've filed with the courts and are waiting for their response, to go to court, or get a default judgement against them. So far it's cost us thousands of dollars in legal fees.

PayPal has done this to a lot of game companies. I don't know if these unlawful acts by PayPal extend beyond the gaming industry.

We're all small businesses. None of us can take this sort of financial hit or the huge distraction this causes from our core business – making great games."

I asked him to clarify the difference between PayPal and Kickstarter funds, and he kindly did so -- "I should be more specific, the KS post campaign pledge manager as I recall."

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[ArchfiendBobbie]

I probably should have worded that better.

I meant that is Paypal is your only possible method to get revenue, you should not trust them and prepare as though you may go bankrupt tomorrow. Because Paypal can, and has, seriously hurt businesses they suddenly decided were untrustworthy which made the mistake of trusting them. This is just the latest in what is increasingly a series of lawsuits against Paypal for withholding money.

 

[Cergorach]

Paypal is like an 'Act of God' event for insurance, your pretty much unable to defend yourself at all and your pretty much... F-ed if it happens to you. It's currently not really realistic for most companies to not use it. Especially smaller companies that have a global audience...

I use it pretty much only as a buyer, not even trusting a bank account attached to the service. There's a credit card behind the PP wall, one that is insured payments for up to a year. Had to use that once, after being scammed and PP saying "Sorry!". CC companies and banks are still bigger fish then PP.

Kickstarter has gained a lot of trust, so people are a lot more willing to use their cc on their site.

I personally didn't follow a couple of business opportunities because of the risk of using PP. It was more of a risk then I was willing to take with a business that would my main income source...

 

[was]

..I have never actually used PayPal. The thought of using an intermediary, instead of paying a business directly, has always made me nervous.

 

[tomBitonti]

Hi,

Edit: These seem to be the correct agreements:

https://www.paypal.com/us/webapps/mpp/ua/legalhub-full

The text is quite a bit different. I'm still looking through them to figure out which agreements apply.

One note is that the financial institution which you use behind PayPay makes a difference as to the details of the agreement, at least for certain of the agreements.

---

Can anyone point to the agreement which would apply for this case?

I found this, but am unsure if it the correct agreement:

https://www.paypal.com/au/webapps/mpp/ua/merchservices-full

Three points of note:

That is an Australian site, and it shows

he PayPal service is provided by PayPal Australia Pty Limited (ABN 93 111 195 389) which holds Australian Financial Services Licence number 304962. Any information provided is general only and does not take into account your objectives, financial situation or needs. Please read and consider the Combined Financial Services Guide and Product Disclosure Statement before acquiring or using the service.

But the merchants agreement has

1.1 Introduction. In this Merchant Service Agreement (" Agreement "), "Merchant", "you" and "your" refer to each customer (" Merchant ") and its designated agents, including your administrative contact, and "PayPal", "we", "us" and "our" refer collectively to PayPal Pte Ltd, 5 Temasek Boulevard, #09-01/ 02/ 03 Suntec Tower 5, Singapore 038985 (" PayPal ").

Is either of those correct, or is there yet another, U.S. branch that is the correct site?

The agreement has this, which would seem to preclude public discussion:

12.10 Non-Disparagement; Publicity. During the term of the Agreement, neither party will disparage the other party or the other party's trademarks, web sites, products or services, or display any such items in a derogatory or negative manner on any web site or in any public forum or press release. Unless otherwise stated herein, neither party shall issue a press release or otherwise advertise, make a public statement or disclose to any third party information pertaining to the relationship arising under this Agreement, the existence or terms of the Agreement, the underlying transactions between PayPal and Merchant, or referring to the other party in relation to the Agreement without the other party's prior written approval.

Also this, which would seem t preclude a jury trial:

12.5 Governing Law and Jurisdiction.
This Agreement will be governed by and construed in accordance with the laws of the Singapore without reference to its conflicts of laws principles. Each party consents to the exclusive venue and jurisdiction of the court in Singapore for any dispute arising out of or related to this Agreement. The parties acknowledge and agree that this Agreement is made and performed in Singapore. The parties hereby waive any right to jury trial with respect to any action brought in connection with this Agreement. The application of the United Nations Convention of Contracts for the International Sale of Goods is expressly excluded.

I may have the wrong agreement, or these terms may simply be non-applying in a US jurisdiction.

Thx!
TomB

 

[trystero]

This who CoC KS was a fiasco; does not surprise me, something has been rotten in this Denmark since 7e was announced and millions of dollars misappropriated and misspent. All the money I gave to this company has yielded me about 2/3rds of what I put into it. Never again will I give so much money to a company on a KS campaign.

What does this have to do with Sandy Petersen or Petersen Games? The company had nothing to do with the running of the Call of Cthulhu 7th edition Kickstarter project, and the extent of Sandy's own involvement was helping replace the original management (who were misspending funds and weren't delivering) with new management who have improved communication and delivered the promised books.

I'm struggling to see your point.

 

[LordEntrails]

..I have never actually used PayPal. The thought of using an intermediary, instead of paying a business directly, has always made me nervous.

So you pay cash for everything? How do you do that over the internet?

Credit cards, checks, money orders. They all involve third party intermediaries. You might be more familiar with them, and they might be highly regulated, but they are still intermediaries.

 

[was]

So you pay cash for everything? How do you do that over the internet?

Credit cards, checks, money orders. They all involve third party intermediaries. You might be more familiar with them, and they might be highly regulated, but they are still intermediaries.

...Yes, I use cash to pay for just about everything. After working in credit card collections for a bank, I avoid other payment methods whenever possible.

...No, I do not shop online. I have yet to need something that I could not find locally for a good price. I only use my credit card in emergencies or when traveling by plane. Being forced to act through an intermediary, however, does not make me any less uncomfortable about the process.

...I do use checks to pay my bills. After 35 years of reliable service, the bank has earned a bit of my trust. Still, I get my statements and balance my checkbook every month to make sure they're not doing anything funny with my money. Unlike PayPal, however, if I have a problem I can walk into a local branch and talk to someone to get it fixed. There's an 'accountability' factor there.

...Even with my bank, I still don't like paying somebody else to 'facilitate' a transaction that I could make on my own. It may not be the cool, tech savvy, ultra-modern way of doing business, but if I could pay all my bills in cash I would.

 

[LordEntrails]

...Yes, I use cash to pay for just about everything. After working in credit card collections for a bank, I avoid other payment methods whenever possible.

...No, I do not shop online. I have yet to need something that I could not find locally for a good price. I only use my credit card in emergencies or when traveling by plane. Being forced to act through an intermediary, however, does not make me any less uncomfortable about the process.

...I do use checks to pay my bills. After 35 years of reliable service, the bank has earned a bit of my trust. Still, I get my statements and balance my checkbook every month to make sure they're not doing anything funny with my money. Unlike PayPal, however, if I have a problem I can walk into a local branch and talk to someone to get it fixed. There's an 'accountability' factor there.

...Even with my bank, I still don't like paying somebody else to 'facilitate' a transaction that I could make on my own. It may not be the cool, tech savvy, ultra-modern way of doing business, but if I could pay all my bills in cash I would.

Cool, I was admittedly skeptical that you were aware that non-cash forms of payment were not intermediaries. Obviously I was wrong and you are well aware that they are.

Myself, there are many thing I want that are not available locally. Therefore I rely on (but don't trust) intermediaries for many of my purchases.

 

[Lanefan]

Therefore I rely on (but don't trust) intermediaries for many of my purchases.

As do I, while noting some intermediaries are (forced to be) more trustworthy than others.

I don't do online banking of any kind, but I'll use my cc to pay for things online when necessary and debit card for many in-person transactions. Paypal I will not deal with at all. I don't know anything at all about Bitcoin other than it exists.

Lanefan

 

[Random Bystander]

I don't know anything at all about Bitcoin other than it exists.

Lanefan

I can provide a summary; but I will have to start with a Wikipedia link on Cryptography: [Link] Note: I am neither an Accountant, Cryptographer, nor Lawyer.

The basic idea of Bitcoin, and related ideas, is that the transaction (amount, sender, receiver, related details) is heavily encrypted, said encryption method being regularly updated. The encryption is done using a public-private key system, to my recall. To gain bitcoin, money is sent to a seller, who sends back an encrypted package. That encrypted package uses the public-private key exchange in a manner I am not conversant with; the end result being that the final package is encrypted using your private key. This is done using bitcoin-specific software. Packages are re-encrypted using the latest method whenever a package is sent.

At some point, when you wish to pay someone using bitcoin, you would start your bitcoin software, portion the correct amount of bitcoins from your electronic wallet, and they would be encrypted and sent appropriately - Or hopefully so.

Bitcoin mining is the process of calculating cryptographic keys using the official bitcoin mining software. Said software had, at the time of its release, an artificial limit imposed to slow it down such that mining could proceed for years. A bounty of bitcoin was set for each mined key, such that, when all keys were mined, a fixed and definite amount of bitcoin would have been released. This bounty would halve at fixed intervals.

From there, the purchase and sale of bitcoin follows the laws of economics, as well as whatever local laws may be imposed.

Overall, aside from being entirely artificial, and implemented in software, it is a financial unit not dissimilar to gold, including much of its value being derived from the "sparkly factor".

Edit: I had typed "Bitcoin mining is the process of factoring cryptographic keys", but the meaning was likely incorrect, and the sentence fragment was changed to "Bitcoin mining is the process of calculating cryptographic keys"