[Updated] Breaking: GlassUp starts reimbursing money to initial backers after PayPal limits their account

[Update: 15 August 17:20 GMT] It seems that GlassUp wouldn’t have to return all the money as PayPal has looked into what has been happening with GlassUp and has notified us through an official statement that the company will be able to withdraw the funds and go ahead with its plans.

“We looked into what was happening with GlassUp and corrected the situation earlier today. GlassUp now has access to all of the funds that they’ve raised on IndieGoGo through PayPal. We think they are developing a fascinating product and don’t want to impede their innovation in any way.”

[Original story]
We have received an official statement from
GlassUp augmented reality glasses project started its crowdfunding round with IndieGoGo in July with a target funding of $150,000 in a bid to launch the initial lot of glasses early next year. As of this writing the campaign had received $97,153 through 402 funders (me being one of them).

With 9 days over $50,000 to go before the goal is reached, GlassUp has sent out an email informing all its backers that it will be reimbursing the money it has received through crowdfunding. The reason? Well it seems that PayPal’s policies are to blame as PayPal will only let a vendor / seller withdraw the money after the product has been delivered. In GlassUp’s case it needs the money to actually make the glasses.

“The reason is that Paypal would release the funds to us only after the glasses are delivered, which obviously is totally useless for our crowdfunding”, notes that email which initial backers (and me) received.

As the email explains, PayPal first blocked GlassUp’s account as too much money was flowing in. “Near the end of our GlassUp campaign on IndieGoGo, Paypal blocked our account, seeing so much cash come in.”

To add to perils of GlassUp, PayPal didn’t inform the company in advance and users who were trying to contribute to the project were not able to do so as the account was blocked. After a series of questions and answers and to and fro emails, the account was reinstated but, PayPal had limited the account such that owners can’t withdraw the money but they can only receive it.

The GlassUp team went ahead and explained their stand. “We complained that this goes against the whole concept of crowdfunding, that such money was bound to fund our project. Paypal answered that we would have been allowed a little part of the total amount, but only after having paid the bills related to the production of the eyeglasses.”

“So we finally had to renounce”, reads the email.

Those who are still interested still have the option of making a payment to the company directly through credit cards. Early bird offers are not up for grabs any more. But, there is a way out though.

“The only option to still take advantage of the early bird offer is to send $ 199 as a donation, and we will manually match these “donations” to the reimbursed Paypal payments, and send you the glasses.”

The copy of the email can be found here.