Law.com is reporting:

A federal lawsuit accuses PayPal Inc. of botching a program intended to be philanthropic by misdirecting funds intended for certain charities and transmitting the money to other organizations without informing donors.

The suit … claims that the PayPal Giving Fund currently lists charities on its website that are not registered to receive donations via PayPal and the site fails to inform potential donors that unregistered charities won’t receive their donations. According to the complaint, PayPal redirects donations designated for unregistered recipients to organizations of its own choosing.

The suit seeks to certify a class of affected donors and organizations and to force PayPal to deliver all donations that have been withheld from designated charities with interest. Where applicable, the suit also asks PayPal to include a 1 percent matching donation promised by the company.

Attorneys representing the plaintiffs suspect that organizations who are missing out on receiving donations are largely smaller, community-based nonprofits who don’t have established PayPal accounts.