New Unused Credit Policy

[Guest]

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[Gerard]

Hey Folks,

Just wanted to draw your attention to an item in the newsletter, and now on the blog: http://kivanews.blogspot.com/2008/12/new-unused-credit-policy.html.

This month we'll be making a change in our Terms of Use to include a new policy towards unused Kiva Credit. This policy applies to accounts where the lender has:

-Has not logged into Kiva for 12 months or longer; and
-Has not received any changes in credit (such as repayments) for 12 months or longer; and
-Does not hold an active loan.

So, if a lender has credit in her account for over 12 months and does not log in, doesn't get any repayments or credit changes and doesn't hold an active loan, we'll provide that lender with a tax-receipt and the funds will turn into a donation to Kiva's operating expenses. This is a reaction to escheatment law, which would require that we hand these idle funds over to the government. I'm sure that this is probably something that you folks will like to discuss, so I'll be keeping an eye on this thread to help answer your questions about it.

A more complete summary of a new version of the terms of use will be provided when we release it in a few weeks, but wanted to give you all a heads up now.

-Gerard

[wthepoo]

Hi Gerard,

thanks...

I have two questions (for now):

1. Will the respective lenders receive an e-mail notification a couple of days or better weeks before the transformation of credits into donations will happen?

2. How are you intending to make sure that lenders will be made aware of this change?


And one piece of advice: As far as I can tell (and that is not very far because it is not really my field of expertise), European lenders (as in "residents of the European Union") are likely not to be bound/affected by this change and should still be able to reclaim the funds.


Best wishes,
Wolfgang.

[AccountAbility]

Well, Gerard, all I can say is that you are tiptoeing into the minefield.  Existing credits will undoubtedly be in a different category from new credits.  And new credits from existing portfolios will undoubtedly be in a different category from new lenders.

1. New lenders should have a place to signify that they have read and understood the ToU before they put anything in. (if that isn't already done).

2. Credits arising from new repayments should have someplace explicit where a lender agrees that by keeping them with Kiva they become subject to the new provision.

3. Since dormant accounts may well not have a valid and current email address, sign-up should include a secondary way to send the conversion notification and tax deductible receipt.

4. Existing credits already dormant are most problematic.  I have a number of thoughts about how institutions have gotten caught in this trap, but I will keep those to myself for now.  The internet is a wondrous place and when it meets escheat laws (which are localized by state in the US) strange things might happen.

Dan

[cpbailey]

Time to make sure someone else has account information in case of my early demise or senility.   

Usually, you have quite some time to retrieve your money from banks once it goes to the state.  It sounds as if Kiva has found a new operating income source.  It seems a preferred method would be that Kiva loan out the dormant money at interest, and have a longer waiting period to retrieve it for long time dormant accounts. It seems less threatening, and it possibly ends up not being claimed in most cases.  I think I will keep an 18 month loan so I don't have to think about this should I decide to go AWOL for awhile.

Colette

[saabnet]

Time to make sure someone else has account information in case of my early demise or senility.   

Don't laugh too hard. Elle and I had long talk after I came home from hospital... I take care of our online life like banking etc and we realized that just about 99% of our passwords are in my head. I'm writing down every possible important account username and password to put in our safety deposit box just in case... Hopefully never to be needed but stranger things have already happened over here.

-Scott

[Gerard]

Hi Gerard,

thanks...

I have two questions (for now):

1. Will the respective lenders receive an e-mail notification a couple of days or better weeks before the transformation of credits into donations will happen?

2. How are you intending to make sure that lenders will be made aware of this change?


And one piece of advice: As far as I can tell (and that is not very far because it is not really my field of expertise), European lenders (as in "residents of the European Union") are likely not to be bound/affected by this change and should still be able to reclaim the funds.

1 - Yes! We will do quite a bit of communication before any credit becomes a donation.
2 - There will be a page presented at log in that explains the change. So every lender will see this. Additionally, there was a blog post today and a blurb in the newsletter.  Also, a post on KivaFriends!

Not sure what you mean abut Europeans not being included?

[AccountAbility]

....I'm sure that this is probably something that you folks will like to discuss, so I'll be keeping an eye on this thread to help answer your questions about it.
-Gerard

One issue which Kiva's Terms of Use does not yet cover is the legality of electronic communications to Lenders, as well as a requirement that each Lender keep Kiva informed of either a valid email address (assuming electronic communication has been legitimatized) or another acceptable method of communication.

Dan

[saabnet]

a blurb in the newsletter.

If anyone has received the newsletter, can you forward me a copy at scott@scott-paterson.com?

Thanks,

-Scott

[wthepoo]

1 - Yes! We will do quite a bit of communication before any credit becomes a donation.

Good, that is important, obviously.

2 - There will be a page presented at log in that explains the change. So every lender will see this. Additionally, there was a blog post today and a blurb in the newsletter.  Also, a post on KivaFriends!

Especially the log in page seems important - for how long are you planning to display it? Or possibly (and best) until a lender first logs in after the change takes place.

Not sure what you mean abut Europeans not being included?

Well, as far as I know (once again: not very far), European consumer protection law makes sure that certain standards apply to (most) internet contracts a consumer concludes with a company/entrepreneur. One of these standards is the Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts.

And as far as I can tell (...),
1. your Terms of Use are not satisfying these standards regarding changes in the ToU; the following dynamic reference clause is regarded invalid:

This Agreement may be modified by Kiva in its sole discretion from time to time and such modifications will become part of this Agreement and will be effective once posted by Kiva on the Website.

(that's why Dan's reference to the relevance of distinguishing between "old" and "new lenders" might get particularly important)

and 2. the conversion clause itself might very well be regarded causing "a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer" (Art. 3 of abovementioned directive); I know that that would be my decision as a judge.


You can circumvent # 1 by making sure lenders are informed of the change and have an opportunity to object regarding their old funds.
# 2 is less predictable but also impossible to circumvent.


Best wishes,
Wolfgang.


*****
Just read up on it a little - it is not as easy as I had thought. You can argue that the European consumer protection laws are not applicable because (a) Kiva does not provide a service to the lenders, or (b) that the service has to take place outside the European Union. Still, I think the question is at least debatable.
W.

[Diane R]

You can circumvent # 1 by making sure lenders are informed of the change and have an opportunity to object regarding their old funds.

Putting up a login notice and sending a no-response-required email wouldn't be sufficient, though, I don't think.  I would like to see some sort of "click here to acknowledge receipt of this email" button in any email sent to idle users, to verify that they've seen it.

I gave out eight gift certificates for Kiva last Christmas.  Two of them were used by my sons, but only because I poked at them.  The other six were eventually used, but again only because I poked their recipients, most of whom don't really use email.  Every single one of the loans they funded have paid back some, or in several cases all, of the funds, and not a single one of those eight (except for my sons, whom I had to poke at about it) has done a thing.  None of them login to Kiva.org (including my sons), none of them respond to my emails to go get their money or re-lend it (several of them don't ever read emails).  So basically in another year you'll be taking the money I gifted to my friends and relatives to lend, if I can't get them off their behinds to either re-lend or to create Paypal accounts and make a withdrawal.  If you send them email about this impending action and don't get a reply, you can't say it's because they're unavailable: they may just have changed emails, for instance.  Seems to me some form of positive check-off should be required before co-opting their idle funds.  And one year seems just far too short an interval.

I understand what you're trying to accomplish, but you've just successfully talked me out of giving any further gift certificates this Christmas.

--Diane.