PayPal has faced its share of bad press over the years: some fairly, some not. In the past, they’ve faced controversy for shutting down donations for victims of Hurricane Katrina and a fundraiser for Doctors Without Borders. But they did themselves no favors this time by nastily scuppering an initiative to help needy kids at the popular snark site Regretsy.
Regretsy was working with their readership to collect donations to get toys to more than 200 needy children for Christmas. As they had seen used on countless other internet sites, Regretsy added a PayPal Donate button on to their pages. Readers donated as little as $2 and plenty gave much more. Regretsy collected so much that they were not only able to buy toys for the children, but were also planning to give cash donations to the families to help them through the holidays.
PayPal, however, was not impressed. Despite it not stating anywhere in PayPal regulations that you have to be a charitable organization to use the Donate button, and despite Regretsy making it very clear exactly how the funds were to be used, they told Regretsy that not only did they have to remove the donate button, they had to return all donations to the givers (minus the PayPal fees, of course.)
Regretsy then tried another angle: to have their community buy the toys Regretsy had already purchased and then have the toys shipped to the needy kids. PayPal let this go on for a while (and took a commission on every sale, natch) until they decided that, too, was unacceptable and made Regretsy refund all the purchases (minus the PayPal commission, of course).
Regretsy representatives were understandably furious, as you can see in their blog post. In attempting to clarify exactly what the Donate button can be used for, the PayPal representative actually stated “You can use the donate button to raise money for a sick cat, but not poor people.” Say what? To add insult to injury, PayPal then froze all of Regretsy’s accounts, leaving them in the position of having no cash to work with. (All the while keeping all fees PayPal made on every transaction.)
There are ways to work with your clients who may be in contravention of your (sometimes incomprehensible) rules. This is an example of what NOT to do.
Regretsy unleashed the wrath of the internet, and PayPal has been bearing the brunt all day.† Facing a barrage of Internet criticism and thousands upon thousands of negative remarks, PayPal has made a turnaround: they state they have released Regretsy’s funds and will be making a donation to help needy children. But the damage may already be done.
Lesson learned: it never pays to actively play the role of Grinch on Christmas.
Photo Credit: Mykl Roventine on Flickr