|Tue Dec 6 2011 22:56:58|
Regretsy Tangle with PayPal Raises Questions
By: Ina Steiner
It started as a fairly typical rant against PayPal policies and turned into a major brouhaha picked up by media giant CNN. Regretsy blogger April Winchell, who goes by the name of Helen Killer on her blog, complained when PayPal told her she had broken its rules by using the Donate button to raise money for a project in which she was donating toys and money to needy families. She said PayPal froze her funds and requested that she refund unprocessed donations.
The Consumerist picked up Regretsy's story, and when a CNN reporter began asking questions, PayPal told CNN it had released the funds and was working with the account holder. PayPal then wrote about the issue on its blog.
A blog called TheGreenGeeks also wrote about the issue, and its post shows how confusing it is if you want to do charitable fund raising but are not a non-profit.
Why would PayPal let a for-profit use the donate button and then ask question if the account holder is a non-profit, after already collecting donations? On its own blog, PayPal said it requires certain documentation to prevent misuse of the donated funds. "In this instance, we recognized our error and moved as swiftly as possible to fix it." What was the error? Or did PayPal make an exception for the Regretsy blogger?
According to Regretsy's tweets this evening, "You DO NOT have to be a NPO to solicit donations. Paypal admitted they gave me the wrong info when they called me today," and that "It's a gray area and they admitted it was subjective and that they made a bad call." Winchell, who is also an author and actress, said she had raised $150,000 in donations using PayPal in the past 2 years.
PayPal acted in this case because of media attention, but what about the next person who encounters such issues and doesn't have the same kind of media savvy as Winchell? While it was great that CNN took an interest in this specific case, they didn't ask PayPal questions about two of the most interesting aspects: PayPal's practice of freezing funds and of keeping a portion of fees on refunds. It's amazing what the light of public scrutiny can accomplish, as Regretsy's owner discovered today.