It’s PayPal’s World – We Are Simply Living In It

The Internet is exploding today with reports that PayPal allegedly froze funds intended for charity after deeming it “not a worthy cause.” It all stems from this blog post on Regretsy.com, a self-titled “fail blog of hand crafts.”

Out of the kindness of their hearts, the folks at Regretsy created “a giant gift exchange program, where you could buy a gift for the over 200 children [they're] helping.” They state in their blog post that eventually they received so much money, they decided to send out monetary gifts as well. However, this holiday dream quickly turned into a nightmare when PayPal allegedly froze Regretsy’s account. The Regretsy folks, barely disheartened, decided instead to take toys that were already purchased and offer them up for sale on their site. “You could buy them according to what you wanted to spend, and we would send them on to the recipient of your gift, just like any other retailer.” If this sounds familiar, let me remind you that Amazon allows people to anonymously send gifts to people through its Wish List program.

It's PayPal's World - We Are Simply Living In ItHowever, Regretsy reports that PayPal once again shut it down. It’s said the company demanded that Regretsy “must refund all the donations and purchases that have not been processed.” One of the most shocking details comes from the alleged conversation the author of the Regretsy blog post had with a PayPal representative. The author tells PayPal that in the PDF instructions for the Donate button, it says the button can be used for “worthy causes.” The PayPal representative is said to have responded that what Regretsy was doing was not a worthy cause — it was charity. Regretsy reports that the representative tried to prove his point with an example: “You can use the donate button to raise money for a sick cat, but not poor people.” So charity is not a worthy cause, if what the Regretsy story alleges is true — at least not in PayPal’s world. What’s more, PayPal made Regretsy return the donations, as well as the sales from the toys. Sounds about right if PayPal was only trying to protect those who gave money to Regretsy, except for the fact that PayPal keeps all the hefty transaction fees for its own gain.

So there you have it, folks. From Regretsy’s reported interactions with PayPal, it seems that you are forbidden from using PayPal to accept donations to buy toys for needy children, and forced to return the money that was donated for the cause. However, at the same time, PayPal happily walks away with the profits it made from those same transactions. Is PayPal going to return those fees? Probably not.

I talked with a friend of mine who is currently studying law and asked for his opinion; here are his thoughts:

First off, Regretsy did not break any policies or agreements. Furthermore, PayPal states on [its] website that “donations not associated with a charity or nonprofit organization don’t need to meet these requirements, but all donations are subject to review.” So clearly [PayPal] allow[s] donations to any company, organization, or person.

If Regretsy’s side of the story is as black and white as reported, I, like many others, find this situation extremely unsettling. The problem, though, is that there is no true PayPal alternative. I can’t easily send money to friends and family using my debit card, and there aren’t that many services competing with PayPal that offer a high quality level of service. What I personally would like to see is that wire transfers be made free — at least transfers that stay within the country. I know that in Europe, wire transfers are used as frequently as cash is exchanged, primarily because they are free. Why is it so expensive for us here in the United States?

Whether it is guilty of these allegations or innocent, PayPal has entered a self-invoked death spiral on the social media front by the way it’s dealing with the situation thus far. People who have left posts on PayPal’s Facebook wall have reported many of the posts being deleted, perhaps in an attempt to conceal the situation. If that truly is PayPal’s intent, I can say that it will not end well for the company in the slightest and it certainly will not help its case.

I contacted PayPal for a comment; here’s what the representative there had to say:

We can’t comment specifically on the Regretsy.com account due to our privacy policy. However, we can confirm that the funds have been released and we are working directly with the account holder on this matter. We are working with Regretsy to make a donation to help [its] cause. We’re very sorry this occurred.

For reference, we have clear guidelines for any business [that] uses PayPal to accept donations. For example, we require certain documentation to prevent misuse of the donated funds and, if the recipient claims charitable status, to determine whether they are properly registered. As a regulated payment service, we’re also required by law to follow these guidelines.

We appreciate that this can be an inconvenience, but we have a responsibility to all our customers — both donors and recipients; or buyers and sellers. In this instance, we recognized our error and moved as swiftly as possible to fix it.

Fair enough, but what about the representative’s statement that giving toys to needy families is not a worthy cause? I am glad PayPal is taking some responsibility for this mess, but I also cannot wait to see how the rest of this unfolds. (Will the original representative be terminated? Will PayPal’s policies change as a result of this highly publicized incident? We shall see.)

What do you think about all this? Are you ditching PayPal forever or is it simply too vital a service for you to give up?

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  • Paulsub63

    Ditch it. Boycott sites that use Paypal, and encourage sites to use alternatives.

  • Rflii

    PayPal has always been the devil who had to make a deal with because of the marketshare.  I would use any other company in a heart beat.  This is not the first time they have disregarded the rights of a customer that they ended on the wrong side.  Their execs only care for the money they collect not about providing a service with integrity.

  • Charles O.

    honestly, paypal has ripped me too often. incredibly convinient but ill be living happily without. A FREE or at least cheaper alternative would be absolutely brilliant.

  • Sylvia Webb

    I ditched PayPal years ago and will never use them again unless they are the only option. Their competitors aren’t much better. I use wire transfer rather than PayPal. The biggest problems is the rare ocassion I need to get money to someone who doesn’t have a checking or savings account.

  • jay

    The internet is full of PayPal.CON horror stories! Google will return sites dedicated to complaints about pp.CON!… this isn’t new at all! Boycott pp.CON! Stop using their service! Find an alternative!

  • Grandms1

    I have used PayPal several times, simply because it was so convenient.  However, this makes me think twice about whether I’ll continue to do so.

  • Welding Freak95

    this is a travisty!!! this is yet a nother example of big companies greed it makes me so so sick i was a needy child when i was a kid sometimes my only christmas preasents were through some donations from a person that had a heart SHAME ON YOU PAY PAL SHAME ON YOU SHAME HAVE YOU NO SOUL HAVE YOU NO HEART? HAVE YOU NO COMPASION HAVE YOU NO affection for the less fortionant i dont really have anything still but you dont care if i starve just so you can have your dollar you dont care if you take my last cent so you can meet your quoata THIS IS RMTHE REASON AMERICA HAS GONE TO HELL YOU DONT CARE YOU WORSHOP YOUR DOLLAR AND NOT YOUR FELLO MAN SCREW YOU IM NEVER USING YOUR SERVICE NOW

  • Lasaboy

    PayPal has caused no end of drama for the charity I am treasurer of, we now use GiveNow and have no problems at all, PayPal wanted all directors, names & addresses details phone numbers etc (they said it had to do with anti-money laundering laws) ah excuse me we are in Australia not the USA, they wanted more information than the Taxation office requires, to even think about setting up a paypal account including bank details (I gave the bank details, but advised the bank under no circumstances was PayPal allowed to withdraw funds)
    I am still no sure if we are going to follow through with the details or just leave it hanging, GiveNow had the account up and running inside a week, I started the fund with PayPal last year

  • Welding Freak95

    HOW DARE THEY? LOOK INTO THE EYES OF A CHILD THAT DOESN’T HAVE IT EASY TELL THEM YOUR THE GRINCH THAT STOLE THEIR CHRISTMAS I DARE YOU TO TELL THEM PEOPLE CARE AND WANT TO HELP BUT YOU REFUSE TO LET THEM… WHAT IF IT WAS YOU WHO HAD A CRAPPY JOB AND COULDN’T PROVIDE FOR THEIR FAMILY WELL LOOK INTO THAT CHILDS EYES AND WAVE A PREASENT INFRONT OF THEM AND SAY NO NOT FOR YOU AND GIVE IT TO A KID WHO HAS GOOD PARENTS WITH BETTER JOBS AND LAUGH AS THEY CRY AND SPIT ON THEM THATS BASICALLY WHAT YOUR DOING TELL THEM THEIR NOT WORTHY BREAK THEIR LITTLE HEARTS YOU MONSTEROUS DISPICABLE GLOBAL COMGLOMERANT OF SHAME YOU SHOULD GO BANK RUPT AND IT’LL BE YOU WITHOUT A JOB LOOKING FOR SOME KINDNESS AND SOME ONE STOMPS ON YOU AND SAYS YOUR NOT A WORTHY CAUSE AND LOOK YOUR CHILDREN IN THE EYE AND TELL THEM THEY CANT HAVE A CHRISTMAS WHAT KIND OF SICK PEOPLE ARE YOU?? YOU SHOULD ALL BE FIRED HUNG AND FORCED TO WATCH PAY PAL BURN

  • http://twitter.com/Flowspoon Flowspoon

    As you said, “there is no true PayPal alternative”. That in itself should bring up questions regarding monopoly.

    I had a run-in with Paypal when they told me I could not have access to a large payment my business received for an order. Some bull about my only being able to access $300 every 10 days. I told them it’s MY money, and I wanted access to ALL OF IT. They tried to talk me out of getting a Paypal debit card sent to me immediately. I told them in no uncertain terms:

    “You are NOT A BANK. It’s my money, and I will choose to use it at MY discretion, NOT YOURS.”

    There needs to be a viable alternative to these pieholes. Seems illegitimate that there isn’t one.

  • http://twitter.com/Flowspoon Flowspoon

    As you said, “there is no true PayPal alternative”. That in itself should bring up questions regarding monopoly.

    I had a run-in with Paypal when they told me I could not have access to a large payment my business received for an order. Some bull about my only being able to access $300 every 10 days. I told them it’s MY money, and I wanted access to ALL OF IT. They tried to talk me out of getting a Paypal debit card sent to me immediately. I told them in no uncertain terms:

    “You are NOT A BANK. It’s my money, and I will choose to use it at MY discretion, NOT YOURS.”

    There needs to be a viable alternative to these pieholes. Seems illegitimate that there isn’t one.

  • http://twitter.com/Flowspoon Flowspoon

    As you said, “there is no true PayPal alternative”. That in itself should bring up questions regarding monopoly.

    I had a run-in with Paypal when they told me I could not have access to a large payment my business received for an order. Some bull about my only being able to access $300 every 10 days. I told them it’s MY money, and I wanted access to ALL OF IT. They tried to talk me out of getting a Paypal debit card sent to me immediately. I told them in no uncertain terms:

    “You are NOT A BANK. It’s my money, and I will choose to use it at MY discretion, NOT YOURS.”

    There needs to be a viable alternative to these pieholes. Seems illegitimate that there isn’t one.