Paypal Kills Christmas for Regretsy, Needy Families [Updated]

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Just in time for the holidays, here's your Internet beef (it concerns charity this time): On one side, there's Paypal, your go-to method for paying for things online without using a credit card. On the other, there's Regretsy, the hilarious "fail blog of hand crafts." To get everyone up to speed: Regretsy set up a gift exchange where people could buy gifts for 200 needy kids. They raised more money than expected, and with the extra cash, planned to send a monetary gift to the families along with the presents. However, as Helen writes on Regretsy, they used the "Donate" button -- a no-no, apparently -- Paypal says it's only for nonprofits. So Paypal froze the account and is making her refund the donations.

When that happened, Helen came up with a work-around. She writes, "Since these toys are already purchased, I decided to offer them up for sale on this site, just like any other retailer would. 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." That, too, was shut down by Paypal.

A phone call ensued -- Regretsy posts highlights from the conversation -- which ended in the Paypal representative telling Helen she had to "refund everything, write a letter saying you understood what you did WAS WRONG AND YOU WILL NEVER DO IT AGAIN, and then request permission to close your account."

Helen writes,

Then, for good measure, they froze my personal account, which has revenue from my book sales, e-books and all the other Finnish Folktales Swag. They'll be holding that money for 6 months.

So to recap:

$ They allowed me to use a donate button, and got a portion of the donations
$ Then made me return the donations, and kept a portion of the fees on the donations
$ They allowed me to use a Buy Now button to sell gifts individually, and got a portion of those sales
$ Then made me return the sales, and kept a portion of the fees on the sales
$ They processed the toy purchases, and made fees on that

They have made a fortune for not doing anything but making me manually return thousands of $2 sales and contributions.

I have been able to guarantee purchase and shipment of the toys, so that part is happening, as are the letters from Santa (most have already been delivered).

However, I am very sorry to say that at this point, I am not able to make a monetary gift to the families. They have frozen everything that was not already spent or donated, and I have no more funds to make a gift of that size.

MERRY CHRISTMAS

Interestingly, while the Daily Kos writes that Paypal's Facebook page has been flooded with comments from people irate over all of this, we don't see any -- has it been purged? [Ed: They're there -- click on "Everyone (Most Recent)" under the photos at the top -- thanks Doodle Bean!]

People are Tweeting about it, in any case:

Screen shot 2011-12-06 at 9.30.31 AM.png

We've contacted both Paypal and Regretsy for more info.

Update: Paypal has issued what some are calling a rather "half-assed" apology on their website. They write, "We can confirm that the funds have been released and we are working directly with the account holder on this matter. Just like anyone else, we believe strongly in helping those in need, especially around the holiday season. We are working with Regretsy to make a donation to help their cause, and we're truly sorry this occurred." Which sounds good.

They also write (a bit defensively, it seems): "We appreciate that this can be an inconvenience, but we have a responsibility to all our customers - both donors and recipients; and buyers and sellers. In this instance, we recognized our error and moved as swiftly as possible to fix it."

Update 2: Helen has an update on Regretsy as well. She writes, "In addition to an apology, Paypal has unfrozen both my personal account and my business account. It's a nice gesture, but I've already refunded thousands of dollars in donations, so they've basically just given me access to money that wasn't in issue to begin with. And they're refunded $77 without explanation, and I have no idea what that represents."

They have also offered me the opportunity of doing unlimited business without fees through the end of the year. It's really the only way I'd use them at this point, since they won't be getting anything from me."

Whether any of this drama means Paypal will be different, she doubts, but echoes a sensibility heard 'round the web: we got someone to pay attention.

Read more about this on the Consumerist: PayPal Continues War Against Regretsy, Freezes All Accounts & Halts Gift Exchange

[JDoll / @thisisjendoll]

Go to Runnin' Scared for all our latest news coverage.

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18 comments
Madeinmanhattan
Madeinmanhattan

Paypal has been ruined for years now. It amazes me that anyone would trust paypal as an option for anything. I as a merchant have had my funds held for no reason and you know they just hold funds to make interest off the money. I'm not the only one either (see for yourself: http://www.paypalsucks.com ) Im appauled at the things we allow them to do to us with just agreeing to their terms. I'm a lot wiser now and would never use them as an option again.

U4eah
U4eah

SHAME...SHAME ....SHAME ON PAYPAL!

Pctired001
Pctired001

Several things puzzle me about this entire situation.  First, how can anyone be so blind to all the good things that Regretsy accomplishes?  They walk their talk and make a difference in the lives of so many people.  Secondly, why make it appear that it was a 'misunderstanding' of some sort while pointing the finger at Regretsy and others?  NONE OF IT WAS OF THEIR DOING SO STOP TRYING TO MAKE IT APPEAR THAT WAY!  Thirdly, why all the misleads in this article?  Even the title implies that there has been a resolution and the article indicates that Paypal has jumped on board this wonderful cause and will make a donation.  Exactly, where in the article, is the resolution and why a delay in making a donation?  And, lastly, perhaps the most important puzzle of all.  Is Paypal against the happiness of children?  This is the one time of year that we all should make every moment special for them.  Geez, Virginia, you'd think there was no Santa Claus in Paypal Land.

Leah Daziens
Leah Daziens

Unfortunately, PayPal did not bother to contact Regretsy prior to releasing the statement claiming: "...we are working directly with the account holder on this matter"

So, that would be a LIE!

This is an example illustrating the need for investigation, regulation, and probably prosecution -- and most definitely litigation. It is amazing to me that a company – which is most definitely a financial institution – can arbitrarily freeze / seize a clients funds for 180 days. I want to know how much client $ they have “frozen” on any given day and how they are profiting from that. The Paypal apology was an “we’re sorry we got caught” and did nothing to clarify their policies or outline how they would change their processes. The States Attorneys and the IRS need to get over to PayPal and start digging!

If you don't like the idea of doing business w/ a company that can randomly freeze / seize your account, then please read Andy Greenberg's article at Forbes http://www.forbes.com/sites/an...

Karin Lundquist
Karin Lundquist

According to Regretsy, they have yet to be contacted by PayPal.

Cori Davis
Cori Davis

Despite Paypal's assertion that they have "moved swiftly" to correct their mistake, April Winchell of Regretsy confirms that she has not been contacted by Paypal, the account is not unfrozen, and no donation has been made. So I guess by "Moving swiftly" they mean "say anything that will get the internet off our backs." Here's the link to the latest: http://www.regretsy.com/2011/1...

Crowamonghens
Crowamonghens

Paypal let some douchebag in Indonesia hack my password and buy $230 Oakley sunglass lenses, and then put a limit on MY account because of it - yet they allowed this obviously suspicious transaction go through in the first place. From my research, this has happened to a LOT of people, including internet-savvy folks and IT people. Beware of Paypal.

Jen
Jen

I use paypal for my business and online stores.  Anyone familiar with a similar alternative? Email: jen@jenshouseofchai.com  Thanks.

jooberdoober
jooberdoober

Ever since Meg Whitman/Ebay took over Paypal I won't have anything to do with any of it.

Veggiesgirl
Veggiesgirl

The problem to is the person on the phone told her you could "Rasie money for a sick cat but not poor people." A Direct quote from someone in the office of paypal, about how you can be a normal person and use the donate button.

Raeyla
Raeyla

The comments on PayPals page are in response to PayPal posts, not on their wall. This is because we (the posters) figured out early on that PayPal has their wall hidden by default, showing only their posts when you first look at the page. Last time I looked, the top post from paypal, which had maybe 20 posts when this started, now has over 800, despite posts being deleted quickly.

Doodle Bean
Doodle Bean

The Facebook comments are there - you just have to click on "Everyone (Most Recent)" which is under the photos (center top)

McRose
McRose

google payments!

Raeyla
Raeyla

I stand corrected. There are posts on the (hidden) wall as well.

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