I recently read this article on OpenCa.mp’s blog which I found through HackerNews. The article explains the story of PayPal harassing the conference organizer and shutting down the conference’s PayPal account. At the end of the article the author wonders if PayPal is attacking only OpenCa.mp. The truth is that PayPal doesn’t have anything in particular against OpenCa.mp — PayPal hates all events.

Background Info:
If you haven’t read it, read the full article on OpenCa.mp’s ordeal with PayPal on their website. OpenCamp is a conference put on by John Pozadzides who has put on the WordCamp Dallas and DrupalCamp Dallas conferences in the area. This specific event is expected to bring 1,000 web professionals in attendance and features these spreakers. The event is scheduled to take place on Agusut 27-20 in Addison, TX.

Numerous people from PayPal questioned the producers of this event about their intent and the details of this conference. Here’s an example as told by John (excerpt):

This morning I got a call from “Kathleen” (yet another unknown anonymous employee) in the “Risk Department”, explaining to me that they view events as being “extremely risky”. She told me that they would “rather close an account than have to eat a couple hundred dollars in disputed charges”. She went on to tell me that PayPal “doesn’t make much money off events” and the bottom line was that they just don’t care about them.

After this comment, PayPal shut down the conference’s PayPal account and asked for very personal pieces of information, including all of the contracts executed for OpenCamp (speakers, vendors, sponsors) and copies of bank statements.

My take on why this happened:
Conferences are a big risk for PayPal to take. For a traditional business (buying and selling many physical goods) the risk PayPal bears is the difference between the sales that have been billed and products received by the buyer. This risk is spread out on a continuous basis and accumulates as the business books sales.

Conference attendees, on the other hand, are billed for a ticket in a compressed amount of time (usually less than 4 months) and to an event that takes place on a specific date. The organizer is in complete control of every piece of information about the event and there’s no way for anyone to rate event organizers like there is a shop or service provider. If for any reason the organizer takes the cash from all ticket sales and runs, PayPal is on the hook for all of those charge backs from angry would-be attendees.

To put numbers behind a situation like this, if an organizer charges 400 attendees $1,000 dollars for a ticket ($400k total) and does not follow-through with the conference, PayPal loses all of that money instantly because of their current fraud policy and would stands to gain only $4,000 (~1% of sales) from transactions fees, leaving their risk in far excess of their potential reward.

So, Paypal hates conferences, which begs a few key questions:

• How does Eventbrite handle event fraud? Seems to me that they have to deal with this same situation over and over again.
• Why are conferences and the rights of conference organizers not specifically referenced in PayPal’s policies?
• Was John alone in his experience with Paypal or has this happened with other organizers?

UPDATE: I was curious to see if you could pay via Paypal on major event ticketing platforms other than Eventbrite and found out that:

• You can’t purchase tickets on TicketMaster using Paypal.
• LiveNation does not accept Paypal.
• You can buy tickets through Paypal on Stubhub, but they were acquired by eBay (who also owns Paypal) in January 2007.

Putting on an event is like producing a movie. There are actors (speakers), there are financiers (sponsors), the showing (the event), and the release to the viewing public (attendees). Just like many movies, not all events succeed.

Some events fail small, such as a meetup group not happening, and some fail big, like an international conference where people paid to travel oversees and the event was canceled on them at the last minute. Just this week an event called the Partners for Innovation and Growth produced by Tanya Noel was one of these events.

The PGI event was planned for July 27^th thru July 30^th with no set location or schedule given to speakers or attendees. For full disclosure, I was supposed to be speaking at this event and StartupDigest was actually a media partner for this conference for a short time. I pulled out as a speaker and partner when I felt the conference was not going to be organized as well as I thought it could be.

On June 27^th at 8:01am, the attendees who paid to attend this event were sent an email informing them that the conference had:

“changed from Viareggio, Italy, to a beautiful conference center in Umbria. We’re very sorry for any inconvenience this may cause to you. The conference will take place Monday & Tuesday June 27th and 28th, and will be less structured, following the Unconference style.”

The attendees were not informed that the event had been canceled but changed locations to Umbria. What followed remains largely unclear, but what is clear is that Tanya never showed up to Italy, and we have learned from the stranded attendees that the event in Umbria never took place and that she blamed her Italian counterpart for “hijacking” the conference.

All speculations aside, the bottom line is that there are people who paid for a conference ticket, paid to travel to Italy, and have gotten neither their money back nor even a straight explanation.

There is no mention of any updates on the situation besides the event’s cancelation on the PGI Twitter page, Facebook page, Eventbrite page, or website. The last time Tanya tweeted about the event at all was on June 23rd. What’s worse is that I found a press release on their media page promoting their next event in the Fall 2010 with a list of speakers that “may or may not be attending.” I’m not kidding. Here’s a screenshot of this page if it’s taken down (keep in mind some of these speakers listed here were people she stranded in Italy):

I understand that producing an event is hard and sometimes ends in failure. What I don’t understand is failing to give a straight story to the people who spent time and money to attend the event, failing to help them out in its wake, and failing to show any lessons learned for promoting the next event.

In the future, if you are organizing a paid event, especially one that involves travel, you need to:

1. Commit to definitely paying or definitely not paying for a speakers travel & lodging from day one so you can avoid confusion later. This decision should never hinge on a sponsor and should not change over time.
2. Set a specific “go or no-go” deadline on the event for yourself. If you’re openly recruiting an international audience, this deadline must be at the very least one full week ahead of time. If you push forward beyond that date, there’s no turning back, even if only 10 people show up. Anyone would much rather show up to a lame conference than chase one that doesn’t exist.
3. If you do decide to cancel, email all attendees, speakers, sponsors, presenters, media partners, and everyone else involved in the event immediately. Mark it as URGENT in the subject line to maximize readership of the initial message.
4. Post daily updates on your website and Facebook/Twitter channels about what you’re doing to wind down the event and get people their money back.
5. Do not try to transfer attendees or speakers at the last minute to another event, whether it’s yours or not, and avoid the inevitable cancelation.
6. If someone pays you for a product or service you can’t deliver, give them their money back immediately. Don’t drag it out. And if you’re broke and upset because you can’t pay back what you owe, at least be honest about it so people know what’s going on.

If you are one of those very unfortunate people to have wound up in Italy stranded with nowhere to go, please reach out to me and I will connect you with our StartupDigest curators in Italy. We might as well try to make the most of this experience for all of you.

Below are some of the tweets I pulled around the situation. The official hastag is #ievc. Leave any comments you have below or tweet with the #startupdigest hashtag and I will make updates to this post as needed.

idarose: I am suddenly realizing that I am the only person remaining in Tuscany for the canceled #IEVC conference…talk about my hopes squashed

vc20: RT @valto: #pgivc #ievc it’s starting to look like the PGI conference is not happening. Some mess by the organizer: http://bit.ly/b5HGNj

RT @christinelu: thinks @PGInnovation owes people an elaborately well made up explanation for why the organizer is a no show and gave people no warning.

@papadimitriou @valto she’s making fun of us. Moving the conference to Umbria is fraud. Am I the only one very pissed?

@papadimitriou I asked for a full refund yesterday but got no answer yet

@christinelu thinks @PGInnovation owes people an elaborately well made up explanation for why the organizer is a no show and gave people no warning.

PGInnovation: We have a new venue for IEVC Tuscany! Please contact us for further details.It will start on Monday at 10am. info@pgi.vc Thank you! #pgivc

steookk: @valto can anybody give a full explanation of what is going on for tomorrow’s event in Viareggio? Our complains in FBpage were deleted #pgivc

@christinelu: @PGInnovation stop perpetuating bullshit Tanya. i read the email. people know i’ve been patient w/ your crap. you screwed people over.

I have reached out to Tanya directly and asked her to give an open and honest face-to-face interview to explain exactly what happened. Let me know if you have any specific questions for her. I will post updates as soon as I have them.