AG Derek Schmidt Urges Better Disclosure, Clarity from GoFundMe

Topeka, KS– Kansas Attorney General Derek Schmidt is urging the owners of the GoFundMe payment platform to make meaningful changes in their disclosure policies to give Kansas consumers greater clarity on where their donations are going.
Schmidt was part of a bipartisan coalition of 28 state and territory attorneys general that sent a letter yesterday to GoFundMe outlining specific steps that they would like to see implemented to the crowdfunding platform. Users of the site pay a fee of 2.2-2.9%, plus 30 cents 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.
“[P]latforms like GoFundMe are not and should not be empowered to unilaterally make decisions regarding where donated funds will go or why,” the attorneys general wrote. “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:

  • 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;
  • 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;
  • Explain in detail how GoFundMe handles donations when GoFundMe decides to (i) block donations, (ii) freeze donations or and/or (iii) re-direct donations;
  • Review its 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;
  • Explain in detail the meaning of the term “unacceptable” in the context of its terms of service and describe whether there are additional internal policies defining it; and
  • Articulate any steps being taken to address these issues in the form of a responsive letter or a meeting with the attorneys general.

 
A copy of the letter to GoFundMe is available at https://bit.ly/3Esv2t3.