Sounds like damping off, probably too much water.
Paper towels- make sure they aren't white- White paper towels have been bleached possibly using harsh bleaches- Bleaches will kill, stunt, or damage seedlings in other ways.
Personally, I don't see the point in germinating seeds in paper towels then putting them into soil. Rockwool, maybe, but soil? Not necessary.
What I do- I stratch the seeds very lightly using the finest grade sandpaper, just to remove the very top layer of skin from the seed yet keeping its structure intact- putting it in distilled, or trusted creek water that has been boiled and cooled down to room temperature, for 4-5 hours or until the seeds start to sink to the bottom, then immediately put them in soil before the seeds have too much risk of drowning.
Better to premoisten the soil using a store brought, well draining mix of various amendments without time release fertilizers (I recently found out from this site's members that some perlite brands have nutes on it), the soil should be not too well draining but enough to ensure the soil is relatively dry, yet moist, within 2-3 days at say, 70- 75F soil temperature.
What I do- I stratch the seeds very lightly using the finest grade sandpaper, just to remove the very top layer of skin from the seed yet keeping its structure intact- then putting it in distilled, or trusted creek or rainwater that has been boiled and cooled down to room temperature, for 4-5 hours or until the seeds start to sink to the bottom, then immediately putting them in soil before the seeds have too much of risk of drowning.
Put the seeds on top of the premoisted soil, then cover with a thin, millimeters-layer of light soil then spray the top of the soil with a fine mist so the seeds don't sink or get knocked around.
Almost all of my seeds sprout out of the soil by 2-4 days, as long as they're fresh enough.
