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GoFundMe waives most restrictive clause in refund policy for Johnny Bobbitt donors

There are exemptions in GoFundMe's refund policy and requirements that donors must meet to get paid back, including submitting a claim within 30 days of making a donation.

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GoFundMe is waiving part of its refund policy that could have prevented Johnny Bobbitt Jr.'s donors from requesting reimbursements, a spokesman for the company said Thursday.

The online fund-raising platform refunds individual contributions up to $1,000 if it determines that donations were misused, according to the company's guarantee policy.

But there are exemptions in this policy and requirements that donors must meet to get paid back. Typically, donors must submit claims within 30 days of donating.

The campaign benefiting Bobbitt — which raised more than $400,000 from roughly 14,000 people — began accepting donations in November, nearly 10 months ago.

 >>READ MORE: The Johnny Bobbitt saga: From feel-good story to money mystery

A GoFundMe spokesman said the 30-day policy will not apply to Bobbitt's donors.

"This is an extremely rare situation and we are working with law enforcement officials to get Johnny the money raised on his behalf, which means the 30-day policy does not apply in this case," spokesman Bobby Whithorne said in a statement.

The 30-day window to file a claim is restrictive, said Daniel Borochoff, president of the watchdog group CharityWatch. "Typically, you wouldn't even know the money was misspent because there wouldn't be all of this reporting," he said.

To Borochoff, the Bobbitt case is an example of why donors are better off contributing to nonprofits that are subject to regulations and financial reporting requirements.

"GoFundMe is a business," Borochoff said. "Their biggest concern is not overseeing the legitimacy of all of these campaigns they're conducting, so there's very little in the way of regulations. It's easy pickings for a scammer."

 >>READ MORE: Why do GoFundMe campaigns like the one for Johnny Bobbitt go viral?

There are other limitations in GoFundMe's guarantee policy. Rather than offer refunds, GoFundMe may redirect donations to the intended beneficiary, or provide refunds in the form of credits redeemable for donations to other campaigns, according to the policy.

A minimum donation may apply to qualify for benefits, and donors are typically required to reach out to campaign organizers and wait 72 hours for a response before submitting a claim. The policy also exempts claims over a "disagreement with how a campaign organizer or beneficiary uses funds raised in excess of the stated campaign goal at the time of your donation." The campaign for Bobbitt exceeded its fund-raising goal of $10,000.

"This campaign is backed by the GoFundMe Guarantee, which means that in the rare case that GoFundMe, law enforcement, or a user finds campaigns are misused, donors and beneficiaries are protected," Whithorne said.

On Thursday, Florence Township police and the Burlington County Prosecutor's Office executed a search warrant at the home of Kate McClure and Mark D'Amico, the couple who started Bobbitt's GoFundMe campaign, as part of a criminal investigation.

Victims are more likely to get compensated if criminal charges are filed, said Stephen Stigall, a partner at the Philadelphia-based Ballard Spahr law firm.

"If the government can establish that your intent was to dupe people to provide you money, then that certainly is a crime," he said, listing wire fraud and theft by deception as possible charges. "If there were charges and then a conviction, usually … there is a mandatory restitution that goes along with that."

 >>READ MORE: How to donate to charity and know where your money is going

GoFundMe's terms and conditions also includes an arbitration clause, meaning users are largely required to resolve disputes with the platform out of court through an arbitration process. And the service agreement makes it clear that GoFundMe does not guarantee donations will be used for fund-raising purposes.

"All donations are at your own risk," the service agreement states. "It is your responsibility to understand how your money will be used."

The language in the service agreement is not unusual, said Matthew Mousley, a partner in the intellectual property practice at Duane Morris. Platforms such as GoFundMe are not "set up in a way to ensure or guarantee all the private transactions happening on their platform are happening in a way that they can control and police."

By providing a guarantee policy, which also covers beneficiaries such as Bobbitt, GoFundMe is actually going above what would be the "default" language in a platform service agreement, Mousley said. GoFundMe has given $20,000 to a bank account created by Bobbitt's legal team to provide assistance during the investigation.

 >>READ MORE: Couple in Johnny Bobbitt's $400k GoFundMe campaign will take the Fifth, lawyer says

Launched in 2010, GoFundMe says it has raised more than $5 billion from roughly 50 million donors. The crowdfunding platform allows users to raise money to pay for a variety of causes and expenses, from medical bills to college tuition.

Users create campaign web pages that include personal stories, photos, and fund-raising goals. The campaign pages can be shared on social media and donors can make contributions on GoFundMe's website. Campaign organizers can then withdraw donations by wire transfer or check.

>>READ MORE: Police raid South Jersey home of couple accused of stealing GoFundMe money from homeless Johnny Bobbitt

GoFundMe charges a 2.9 percent payment processing fee plus 30 cents per donation to cover "the cost of third-party card processors and the safe and secure transfer of funds," said Whithorne, the GoFundMe spokesman. He said the company no longer charges a separate "platform fee" as of December.

The Bobbitt case is unusual, Whithorne said.

"Normally, the campaign organizer would never touch money, but in this unique situation the campaign organizer was permitted to withdraw the funds," he said in a statement. "Regardless, we have taken steps to prevent this extremely unique situation from occurring again."