Tuesday, December 6, 2011

PayPal freezes charity donation account by Regretsy, brews up PR disaster

In the age of social media today, it takes just a small stupid move to create a massive PR shitstorm for your company by your once-loyal users. And this time around, the largest e-commerce site PayPal is under a lot of fire for apparently freezing a charity donation campaign and forcing the organiser website Regretsy to refund all the funds collected to this point.

Here’s what happened – the good folks over the hilarious website Regretsy were holding a Secret Santa campaign where users could pitch in a few bucks and donate towards buying gifts for needy children and families for the holidays. It was a great cause that a lot of people contributed to, so much so that Regretsy decided to add along a monetary gift to the families as well. Regrettably, they decided to use PayPal for this without knowing that the service would come back to rain all over their parade. After the end of the campaign, PayPal contacted the owner of the wesbite and e-mailed him this little bit:

We appreciate that you have chosen PayPal to accept payments for your organization and thank you for your patience during this review process.

PayPal permits the donation button to be used by verified non-profit organizations. PayPal also permits donations to the accounts of individuals or organizations that are authorized to fundraise on behalf of verified non-profit organizations.

It appears that your PayPal account belongs to a corporation, and not a non-profit organization. Please refund the donations that you have collected.

Even though it doesn’t clearly say anywhere in their terms and conditions that the word ‘donate’ is only for non-profit organisations, the cause here is still a charity and a very noble one at that. It’s a donation that’s being asked for not the purchase of any item, so the use of the button is very fair and not misleading in any way. But that doesn’t seem to matter to a baffling PayPal representative who gave some very odd comments outlined at the Regretsy site here. Here’s the best part:

PAYPAL: Only a nonprofit can use the Donate button. ME: That’s false. It says right in the PDF of instructions for the Donate button that it can be used for “worthy causes.” PAYPAL: I haven’t seen that PDF. And what you’re doing is not a worthy cause, it’s charity. ME: What’s the difference? PAYPAL: You can use the donate button to raise money for a sick cat, but not poor people.

So in short, you can absolutely go ahead and use the ‘donate’ button to donate money for the care of a sick cat, but poor children and families are a big n0-no. Got it.

Also, the owner checked out the site to find this:

So yeah, they make you refund all the money back yet keep their share of the money despite being of no use. Thankfully, a good amount of the money was already processed but the rest would still take painful hours for the site owner to manually refund. But most of all, it’s money that could have benefitted many poor children in real need.

Fortunately, this has managed to create a massive user backlash of epic proportions for PayPal as users are lashing this lapse in judgement on the website’s comments section. But more importantly, many have decided to cancel their accounts, create online petitions for PayPal to apologise as well as correct their error, and even have taken up their Facebook page where one will find a very heavy parade of negative comments against the service that PayPal is reportedly deleting en masse. This is not the first time that PayPal has managed to screw up, but might be the most significant and consequential one indeed.

Where do you stand in this

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