This is why PayPal needs to die:
This project stumbled upon one problem after another on each and every step it took forward. Up until now we managed to solve every single one, but at this point there is nothing that we can do.
All of You deserve an explanation of what has happened.
We were hoping to print out “Past Sins” in exactly the same manner as did the team which printed out Fallout: Equestria some time ago - by using the funds that all of you have sent to us. (Some of you may be familiar with other team’s project and maybe even ordered Fallout: Equestria from them.)
Unfortunately PayPal, apparently due to a change in their policy, decided to hold the money until everything will be actually printed and shipped. We do not understand why they made such decision, especially considering the fact that project mentioned above has been conducted successfully in the same way as we intended to organize “Past Sins” print.
We are unable to collect the sum required to print and ship the books on our own, therefore we are forced to indefinitely cancel printing of the books.
Know that everyone who paid will get their money back. Refunds will start going out today. It may take several hours to send all of them.
We put a lot of effort into this project. We spent well over a year and a lot of our own money on preparing the book and making sure that everything will be of the highest quality possible after printing. This is very hard for all of us because we are responsible for involving all of you in this unfortunate situation.
We will make available a finished book for everyone - both version ready for printing as well as the e-book. [...]
For those not "in the know": Equestria Publications intended to create a hardcover edition of Pen Stroke's critically acclaimed "Past Sins". It's been in the works for almost a year; there were several pledges on PledgeBank, and a while ago the project finally reached the point where they were ready to have the book printed and shipped, so they checked back with everyone, confirmed they were still interested, and finally collected payment.
But it seems that PayPal is now refusing to release the money, and as a result, the project doesn't have the necessary funds to actually print and mail the books. Which is understandable — several hundred people signed up, and at 21.21 USD for the book itself, plus 23.95 USD for international shipping (for those not in the North America), I'd guess the total amount they would've had to pay upfront out of their own pocket now reached a high four-digit amount, perhaps even more. That's a lot, especially for a group of volunteers.
Lest you think "scam", BTW, they indeed refunded my money in full, as promised, just a few hours after the announcement was made. (And obviously I accounted for the possibility I might lose the money right from the start, and didn't invest more than I could afford losing.)
Given that, and given PayPal's reputation of interfering with users' business, I'm inclined to believe them when they say the blame rests squarely on PayPal's shoulders: that PayPal is, once again, proving unwilling to act as a neutral carrier, instead deciding to not complete the transactions by refusing to actually pay to the recipient the funds sent.
Now, I can understand why PayPal does this, of course. Its goal as a company is two-fold: it wants to ensure buyers trust it as a "safe" place, and it wants to make a profit. I don't doubt that PayPal is seeing its share of scams, and as such it wants to allow buyers to recover their money; and if it'd already paid that money to a seller, the refund would have to come out of PayPal's own pockets first, and recovering it from the recipient might be difficult or outright impossible.
Nonetheless, this is in no way an excuse. PayPal is unacceptably meddling in users' affairs; they already regulate what you may and may not use their platform for and what you may and may not buy, and now they're going further by making it impossible in certain situations to do business at all. Right now, it appears that it is literally impossible to fund a project through PayPal when you don't already have the ability to pay for everything upfront, out of your own pocket.
And this is in direct opposition to the buyer's explicit instructions and intentions. Just imagine your bank doing the same: refusing to honor a cheque you wrote, or refusing to complete a wire transfer. It's unthinkable; so why does PayPal get away with the same thing?
The reason, I think, is two-fold. First, PayPal is not regulated as a bank in the USA at least (it is in the EU and elsewhere); and, perhaps more importantly, there are no real competing alternatives, meaning that users cannot easily vote with their feet.
But those things can change, PayPal would do well to remember that it exists to serve its users, not dictate what they can and cannot do, buy, sell or pay for. PayPal needs to change its mentality — or it needs to die.