PayPal Acts As Grinch Over Money Raised For Charity Using 'Wrong Button'; Finally Bows To Internet Pressure

from the does-anyone-like-paypal? dept

Tue, Dec 6th 2011 1:53pm — Mike Masnick

PayPal is pretty famous for the fact that almost no one likes it. It's why we're finally starting to see some alternatives springing up (or getting ready to spring up). And yet, it still seems to go out of its way to make bad decisions. The latest, via Consumerist, is that it completely shut down a charitable "secret santa" program that regretsy set up, all because the site used the "donate" button, rather than one of its other buttons. According to PayPal, only registered non-profits are supposed to use the donate button. Of course, rather than point this out to regretsy, it let a bunch of transactions go through, and was requiring that they all be reversed... though PayPal would keep the transaction fees (of course). Apparently, in the mind of PayPal, no one but a non-profit ever asked for donations for anything. Seriously, though, if PayPal has such strict rules for using the donation button, why not, um, make companies prove their status before they can set up a site using the donate button?

Either way, as can happen when someone in PR finally wakes up to what's happening online, the public response to this Grinch-like effort is that PayPal has agreed to back down. Of course, it shouldn't have taken a flood of negative publicity for PayPal to realize that it screwed up here.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: bad pr, button, charity
Companies: paypal, regretsy

29 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

That Anonymous Coward (profile), 6 Dec 2011 @ 1:56pm

"Of course, it shouldn't have taken a flood of negative publicity for PayPal to realize that it screwed up here."

Mike, have you never heard of PayPal before?
[ link to this | view in chronology ]
- Jay (profile), 6 Dec 2011 @ 2:04pm
  
  Re:
  I refuse to use Paypal. EVER. The fact that they close accounts arbitrarily and are one of the worst processors out there in terms of service makes them more trouble than they're worth.
  [ link to this | view in chronology ]
  - That Anonymous Coward (profile), 6 Dec 2011 @ 2:16pm
    
    Re: Re:
    And there are the stories of them finding orphaned accounts and just adding them to other peoples. These accounts usually have a debit and PayPal decided you need to pay it off, even though it has nothing to do with you.
    
    They are the 1000 lb gorilla for online payments, and we keep waiting and hoping for something better.
    
    A new reason to hate them is they helped develop the tech for Palantir to link random events to stop terrorists. This could explain the overhyped worldwide manhunt for the people who DDOS'd a website while real crime was left uninvestigated.
    [ link to this | view in chronology ]
    - Jay (profile), 6 Dec 2011 @ 3:39pm
      
      Re: Re: Re:
      It's why I'll use Flattr. I'm currently looking for alternatives for my websites that I take an "IANAL" view of copyright for. I would love to use Stripes, but it seems a little complicated for me. I wonder what else will pop up to wipe out that POS that is worse than the IRS in the 90s...
      [ link to this | view in chronology ]
Kevin Sours, 6 Dec 2011 @ 2:07pm

They claim to have resolved the issue
However regretsy currently says otherwise.
http://www.regretsy.com/2011/12/06/breaking-news/
[ link to this | view in chronology ]
- That Anonymous Coward (profile), 6 Dec 2011 @ 2:34pm
  
  Re: They claim to have resolved the issue
  Well like all Paypal decisions they unilaterally decided everything, and tell you how your supposed to respond.
  Why bother talking to the actually involved parties.
  [ link to this | view in chronology ]
Dixon Steele (profile), 6 Dec 2011 @ 2:12pm

"only registered non-profits are supposed to use the donate button"
Except, that's not their policy. As their blog post says of their donation policies, "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." So, non-non-profits can use the donation buttons as long as they provide certain documentation. Which makes you wonder why the CSR that regretsy dealt with was so opposed to finding any way to resolve the situation other than refunding all the money. Aside from PayPal's profits, naturally.
[ link to this | view in chronology ]
- That Anonymous Coward (profile), 6 Dec 2011 @ 2:37pm
  
  Re: "only registered non-profits are supposed to use the donate button"
  "Which makes you wonder why the CSR that regretsy dealt with was so opposed to finding any way to resolve the situation other than refunding all the money. Aside from PayPal's profits, naturally."
  
  Because its just some little stupid website they had never heard of, no one will care or notice. And then surprise surprise people noticed and were vocal, and suddenly their heart grew 10 times in size that day.
  [ link to this | view in chronology ]
  - Marcel de Jong (profile), 6 Dec 2011 @ 4:33pm
    
    Re: Re: "only registered non-profits are supposed to use the donate button"
    Nah, it wasn't their heart that grew, it's their wallet that shrunk. I believe they've lost a lot of customers today.
    [ link to this | view in chronology ]
    - That Anonymous Coward (profile), 6 Dec 2011 @ 11:22pm
      
      Re: Re: Re: "only registered non-profits are supposed to use the donate button"
      The problem is end users are lazy, they are familiar with PayPal and even the pitfalls of using it but they still use it because they have always used it. They are the granddaddy of online payments, so they have to be doing something right, right? They currently have massive mindshare, when many people think of online payment they think of PayPal. When you think of gelatin dessert you think of Jello, even if you buy a different brand in the end.
      
      We need something ready to pounce on all of the evils of PayPal and make it simple to migrate to the new platform.
      [ link to this | view in chronology ]
- Markus Hopkins (profile), 6 Dec 2011 @ 2:38pm
  
  Re: "only registered non-profits are supposed to use the donate button"
  On top of that, the only other policy Regretsy MIGHT have violated prior to putting the button out was one stating that you must be pre-approved to use the donate button when acting "AS a charity" [capitalization mine]. Now, that can be read as either taking donations for something that looks like charity, which is vague enough, or it could be read as taking donations while portraying yourself to be a charity. Regretsy certainly wasn't doing the latter, and since that is a reasonable interpretation, Paypal should have been much more understanding. Paypal *might* require proof no misuse is happening, and they *might* require pre approval, but when you make the buttons so easy to use, you should really make this a LOT more clear than they did. That alone makes their "apology" really hollow, since it claims that their policies are in fact clear (half the apology is devoted to that point) when they really are not... For a more in depth analysis of the policies, and how hard they are to find, go here: http://bit.ly/udiNGK
  [ link to this | view in chronology ]
out_of_the_blue, 6 Dec 2011 @ 2:15pm

What the hell is your point, here? To make Paypal look good?
"Last night we became aware of an issue with one of our account holders, Regretsy.com. ... In this instance, we recognized our error and moved as swiftly as possible to fix it."

THOSE FIENDS! OVERNIGHT CORRECTION! It's INHUMAN!

This is yet another of the pieces that make me wonder if you aren't actually in the advertising business and promoting the exact reverse of what you appear to be. Of course, you COULD just be desperate for material. It's intriguing enough to make me hang around...

But at best, it's another problem already solved by the time it comes to the attention of Techdirt.
[ link to this | view in chronology ]
- weneedhelp (profile), 6 Dec 2011 @ 2:46pm
  
  Re: What the hell is your point, here? To make Paypal look good?
  "It's intriguing enough to make me hang around..."
  
  But no one would miss you if you were gone either.
  
  AND if it was an avarage person trying to do good that didnt have an internet following they would have been screwed.
  
  They made them give back the money, but still wanted their fees.
  
  Ya know asshole if Mike said the sky was blue you would say it is black.
  
  What an asshole you are.
  [ link to this | view in chronology ]
- Pitabred (profile), 6 Dec 2011 @ 2:48pm
  
  Re: What the hell is your point, here? To make Paypal look good?
  The thing is, it shouldn't have been a problem in the first place, and PayPal is known for pulling stunts like this. They deserve every bit of bad publicity they get. And more.
  [ link to this | view in chronology ]
  - That Anonymous Coward (profile), 6 Dec 2011 @ 4:09pm
    
    Re: Re: What the hell is your point, here? To make Paypal look good?
    And they have it in abundance, but nothing ever changes.
    People don't want to look for alternatives because its just "easier" to deal with the PayPal nightmares.
    You would think we could get someone to pass some rules for PayPal to have to follow, but they are busy passing important bills like National Vanilla and Chocolate Cupcake days.
    [ link to this | view in chronology ]
- ZeeBat, 6 Dec 2011 @ 5:17pm
  
  Re: What the hell is your point, here? To make Paypal look good?
  Solved? As in like you solved the global warming problem by not driving to work today solved or solved as in a herpes issue cleared up before you had to leave the house solved?
  
  Or solved because the representative was a complete dick first but they "made" up for it solved?
  
  I just figured out how you could solve piracy. Yes, you. Turn off your computer and get a magazine subscription.
  [ link to this | view in chronology ]
- lucidrenegade (profile), 6 Dec 2011 @ 5:53pm
  
  Re: What the hell is your point, here? To make Paypal look good?
  Aren't you dead yet?
  [ link to this | view in chronology ]
Loreen, 6 Dec 2011 @ 2:20pm

PayPay - bah-humbug!
If I hadn't canceled my Amazon, E-Bay, and Paypal accounts when the stomped on free speech a'la wiki-leaks.... this would totally make me cancel now.
[ link to this | view in chronology ]
Kevin H (profile), 6 Dec 2011 @ 2:53pm

The more I see it happen
The more I think that one should not fuck with Reddit. (Where I saw this a few days ago)
[ link to this | view in chronology ]
SUNWARD (profile), 6 Dec 2011 @ 3:04pm

cats are okay
from the paypal rep:

You can use the donate button to raise money for a sick cat, but not poor people.

words escape me.

http://www.regretsy.com/2011/12/05/cats-1-kids-0/

There are also instances where paypal's own site offers conflicting rules:
http://thegreengeeks.wordpress.com/2011/12/06/why-paypal-is-wrong-regarding-regretsy-accordi ng-to-their-own-policies/
[ link to this | view in chronology ]
- That Anonymous Coward (profile), 6 Dec 2011 @ 4:12pm
  
  Re: cats are okay
  Makes total sense, the pet industry is worth billions of dollars a year. Poor people will still be poor and won't use their service.
  
  /s
  [ link to this | view in chronology ]
k-h, 6 Dec 2011 @ 10:33pm

paypal alternatives?
Do tell!

Any urls?

Are they wikileaks friendly?
[ link to this | view in chronology ]
Anonymous Coward, 7 Dec 2011 @ 6:52am

http://www.wired.com/geekdad/2011/12/5-alternatives-to-paypal/
[ link to this | view in chronology ]
TimothyAWiseman (profile), 7 Dec 2011 @ 10:40am

Donate
" Apparently, in the mind of PayPal, no one but a non-profit ever asked for donations for anything."

Perhaps its just me, but I would prefer to see donate used in a narrower sense. I have always thought of a donation as something given for charity. That certainly doesn't restrict it to non-profits, but it is clearly associated with them.

When giving a voluntary payment for a service already rendered, it is more of a tip or bonus or even an actual payment where the asking price was "pay what you want". When contributing to something from which several people including me will benefit, it is a contribution or informally "chipping in." I know it is just a pet peeve, but it annoys me when donate is used for things other than charity.

With that rant out of the way, PayPal handled this badly. If it wanted to enforce its rules on the use of "Donate" (which is probably reasonable in my opinion), then it should have done its checks before taking the first payment to be processed. It is completely unreasonable to try to enforce that rule after payments have been made by people who were not decieved.
[ link to this | view in chronology ]
themusicgod1, 11 Dec 2011 @ 12:00pm

This would not have even happened had the charity been using bitcoin.
[ link to this | view in chronology ]
dirudir, 21 Mar 2012 @ 5:34am

Paypal alternative
Thanks for such good and useful information. I always trying o find the best alternative to PayPal but always coming back to them. Really can not find deserving online payment gateway without monthly fees. Google Checkout is also good one but it works in the US and UK only.
[ link to this | view in chronology ]
Anonymous Coward, 14 Aug 2012 @ 12:12am

Taxation without representation was one of the major sticking points causing the Revolutionary war with England. In fact, if you'll recall the Boston tea party when colonists dressed as Indians through tea into the bay you might better understand. If you don't know this history, I suggest you go onto Wikipedia and look it up. The Boston tea party led to the Townshend Acts, to skirmishes in the streets, and eventually to the Revolutionary war. Okay so let's talk about this shall we?
[ link to this | view in chronology ]
kumar, 28 Apr 2015 @ 1:02am

Good for new blogger
hi,
informative post to share, even paypal button help those who don't want to monetize their blog. In fact they have not made it for money.

thanks
kumar
[ link to this | view in chronology ]
Payzoff, 13 Jun 2016 @ 4:57am

Payzoff is a global payment platform that offers a safe and simple way to receive 100 different types of payments from consumers all around the world. Find out more about payment methods available at https://www.payzoff.com/
[ link to this | view in chronology ]