PayPal drains adult game maker's account of funds raised on Kickstarter

"It was extremely hard on our business" says Toffer Team in Naughty List News #66

Jan 30, 2022

This week’s edition of Naughty List News was sponsored by Paradise Lust, the erotic dating sim about a stranded pleasure yacht full of beauty pageant contestants looking for a way home.

PayPal is an easy way to transfer and receive money online. Signing up requires only a credit card, and you can link it to your bank account. But the payment processing company also has a reputation for freezing people out of their accounts without much explanation.

This week I spoke with adult game maker Toffer Team, who were frozen out of their funds on PayPal for allegedly offering “sexual services,” an accusation that Toffer Team denies. After waiting for six months for PayPal to restore access to their account, Toffer Team instead found it drained of all funds.

[Correction: In last week’s interview with Scarlett Young, I mistakenly implied via my editing of her answers that she imagines most adult game creators as continuously masturbating. She meant to say the complete opposite, and I deeply regret the error. I have corrected the wording in the article and will work to improve my editorial process.]

What happened to Toffer Team?

Toffer Team ran a successful Kickstarter campaign for their game LIP! Lewd Idol Project that lasted until November 19th, 2020. (I was not a backer myself.) They managed to collect $35,116 from 1455 backers, more than three times what they were hoping to raise. Toffer Team then quickly went back to work on the game, regularly updating backers on their progress. Everything seemed to be going smoothly for Lewd Idol Project.

On July 6th, 2021, Toffer Team had some unfortunate news to share with their backers. PayPal had frozen them out of funds that remained from their Kickstarter campaign without prior notice. The payment processor claimed they had to take these measures because Toffer Team’s content was related to “sexual services,” violating PayPal’s Acceptable Use Policy.

Then, on January 12th, 2022, almost exactly half a year later, Toffer Team announced that PayPal had indeed returned their account but left it completely drained:

Toffer Team 🔞✨ @TofferTeam

Well guys, now it's official... P*yPal took away all of our remaining funds for Lewd Idol Project that were funded in a legitimate way via Kickstarter after six months. This is so frustrating.. 😔 Please DO NOT use this payment processor anymore if you're a lewd content creator.

While the account was frozen, PayPal continuously docked Toffer Team fees for “damages caused by an Acceptable Use Policy violation.” Toffer Team’s account had been accruing these fees until it was left completely drained.

“We’re not going to give up.”

I reached out to Toffer Team’s CEO, the titular Toffer, to see if they had more say about their ongoing kerfuffle with PayPal.

Mr. Hands: What impact did PayPal freezing your Kickstarter funds have on your business?

Toffer: PayPal’s decision to freeze our funds was extremely hard on our business. It immediately paralyzed the production of our game. The freeze inevitably caused delays on the project and forced us to take things much more slowly than planned. We had already released Lewd Idol Project! Volume 1 when the freeze happened, but this situation really negatively impacted the development of the rest of the series.

At the moment, we’re still able to use the sales profits from our previously released titles to fund development. I’m also using money from my own pocket not to stall progress completely. So even if we’re moving at a slower pace than we would have liked, we’re still getting things done. That’s the most important thing to us right now.

We’re also not going to give up under any circumstances. We’ll continue to do our best to move forward and take the LIP! Series to the finish line. This project is very dear to me, and as a company, we want to uphold the promise we made to our supporting fans and backers.

Mr. Hands: How did you try to contact PayPal after they locked you out of your money? Did they get back to you?

Toffer: I tried to contact PayPal many times to fix this situation. I tried using the official support from their app, I tried emailing them, I reached out via social media, and I even tried to get them on the phone. Many of our fans also tried to help by reaching out from different parts of the world.

All in all, we have received precisely zero responses from PayPal since July 2021. We have received no replies to our inquiries and no further explanation from them. The only contact I’ve had with PayPal was when they initially informed me that my account was frozen, and six months later, that they had returned access. They took my funds without even notifying me by email. PayPal’s service and user support are practically non-existent.

Mr. Hands: Do you think the freeze was related to the fact that you produce adult content?

Toffer: Absolutely. PayPal’s reason for freezing our account they sent us in their email was that we were selling “sexual services.” This reason is what we communicated in our official statement last year.

We’ve also been getting dozens of messages about similar cases from other PayPal users. So I suspect that the lovely staff at PayPal are investigating adult content creators of any kind, even outside their platform.

I’m reasonably confident that these account freezes are not automated, which some people believe. That is why I want to spread the word as much as possible. I encourage other creators not to use PayPal if alternatives are available.

Mr. Hands: Have you considered using a different online payment processor? If so, which ones?

Toffer: Using a different online payment processor is a really complicated issue that gives us many headaches. Unfortunately, PayPal is one of the most widely used payment processors worldwide. It’s accepted almost anywhere, and payments are sent and received quickly and easily.

Since we work with contractors worldwide, PayPal was often how we transferred money to them. It’s also how we received the royalties from our sales. Other platforms like Payoneer or Wise could be good alternatives, but not everyone we work with has access to them. The same goes for direct bank transfers and cryptocurrencies.

Transferring money abroad can be really difficult because every country has its own rules and regulations. We always have to keep in mind the complicated rules around money transfers of some countries.

Toffer Team’s LIP! Lewd Idol Project Vol. 1 is out now on Steam and LIP! Volume 2 is coming soon as well.

Why PayPal is allowed to do this

When you sign up for PayPal, you agree to their Acceptable Use Policy, which outlines what happens when you use your account for unauthorized purposes:

[V]iolation of [the agreement] may subject you to […] damages of $2,500.00 U.S. dollars per violation

If you signed up for an account yourself, it’s likely you glossed over these terms because who wants to read a bunch of boring legalese? So I encourage you to check these terms for yourself. The penalties are outlined right at the top of the page. When PayPal determines that you have violated their policies, you agree to let them fine you $2,500 per transgression.

This policy is why PayPal drained Toffer Team’s funds after six months: PayPal had been collecting these fees for each “transgressions” over that period even while they revoked access to Toffer Team’s account. And as Toffer mentioned, PayPal was utterly unresponsive to his requests to come to an agreement of some kind.

Toffer Team most likely fell afoul of this provision in PayPal’s Acceptable Use Policy:

You may not use the PayPal service for activities that […] relate to transactions involving […] certain sexually oriented materials or services

This provision is vague enough to cover anything from the sale of adult content like video games up to and including real-life sex work. PayPal certainly won’t give you a straight answer when you ask them to clarify.

Staying safe with PayPal

Regretfully, it is too late now for Toffer Team to get their money back. It’s highly unlikely that PayPal will suddenly have a change of heart and return it. But that’s also why Toffer stressed the importance of sharing his story: it doesn’t have to be too late for you.

If we zoom out on Toffer’s situation, it’s clear that PayPal holds all the cards. They set the rules on their platform, so they decide what “acceptable use” of your account means. And once PayPal decides that you violate their policies, you have already allowed them to drain your account with perpetual “fees” for the “damages” they incurred.

It’s hard to avoid using PayPal when you do business online. So here’s what you can do right now to limit your exposure to the arbitrary enforcement of their rules:

Never keep money in PayPal that you can’t afford to lose
Enable two-factor authentication
Connect a real bank account to your PayPal account
Only add money to your PayPal balance when you need to make a purchase
Transfer incoming funds to your real bank account as soon as they arrive

If you follow these rules, PayPal can still freeze your account for any reason at any time. But when they do, it should be a mere annoyance instead of a reason to dissolve your business. At the very least, you can insulate yourself from PayPal’s policies by ensuring that a frozen account does not significantly impact your cash flow.

Customers have had enough

San Jose, USA - June 27, 2015: PayPal Headquarters

Toffer Team’s case is unfortunate but far from the only one. Engadget reports that three PayPal users from the United States are proposing a class-action lawsuit against the company on behalf of everyone wronged by their practices:

Lena Evans, one of the plaintiffs who'd been a PayPal user for 22 years, said the website seized $26,984 from her account six months after it got frozen without ever telling her why.

I’ve personally been hearing stories about PayPal’s terrible business practices since at least 2005. And yet this is the first time I’ve read about the company potentially facing the consequences of their anti-consumer practices.

Let’s hope that this class-action lawsuit is a wake-up call for PayPal.

Writing Wrap-Up 📖

S&M Lessons with the Cute Masochist Maid is available now on Steam. This isn’t the type of consultancy I do myself but I imagine it’s quite lucrative!
Blerdy Otome has another list of cheap otome games. I honestly don’t know how she makes the time but I can appreciate it nonetheless!
Swimmer Admiration is available now on Steam and itch.io. The visual novel drama was a huge success on Kickstarter and now has extra CGs to boast.
Romantic comedy Sakura Alien is now available on Steam. An astronomy student forced to choose between a runaway alien bride and his childhood friend? I’ve seen documentaries about this!
VenusBlood HOLLOW International was launched on Steam. This looks like a very expansive tactical RPG about something something age of darkness.
Evenicle 2 is coming to JAST and other stores. AliceSoft released Evenicle 1 on Steam but couldn’t get the sequel past its censors.
Blerdy Otome writes that it’s okay not to play the latest otome releases. I agree because if my backlog topples over it might crush me under its weight.
Trump’s new social media platform will ban nudity and all sexual content. Let me know how that works out for you, hun.