How PayPal Stole Christmas

Stop me if you've heard this one before. Someone who runs a commercially successful website as a business gets the idea to do a big charitable drive to help less fortunate people. Due to their massive readership and a very well-penned heartfelt request, the goals are exceeded within a few hours. Then, PayPal steps in, freezes the account, accuses the website they've been doing business with for years of being scam artists, and insists that every red cent being sent in to help less fortunate people be returned immediately. Of course, with the funds frozen in the account, they are unable to comply. Sound familiar? If you were a regular at Something Awful after Hurricane Katrina devastated New Orleans, you lived it. They are not the topic of this post. Neither are the other sites that have been scammed the same way by PayPal.

Today's topic of discussion is April Winchell's wildly successful humor site Regretsy. A few weeks ago, April was trying to drum up interest for a charity drive to purchase toys for poor children. She would hire an Etsy seller to write customized letters from Santa to all the accepted children and personally would go out and buy a toy for each child on the Secret Santa list. Applications were opened up and the response was overwhelming. A few hours after the PayPal donation button was set up on Regretsy, the project was funded. So many people were complaining about not being able to contribute that April raised the donation threshold to be able to send a monetary gift to each of the families selected for toys. That's when PayPal decided they wanted to earn a whole lot of interest on a frozen account.

April's initial understanding was that PayPal needed some specific information to reopen the account and collect the money. Apparently, that wasn't good enough. She was told she needed to refund every penny she received and start all over again. She did. She followed every instruction they gave her--use the "Buy Now" button rather than the "Donate" button and other minutia--and raised the extra $3000 all over again in a matter of hours yesterday. PayPal shut her down again.

This is where the media aspect comes in. Until this point, it was a private business matter. Now it's a story of how terrible customer service can, should, and will hurt a company's reputation.

April Winchell begin posting horrid responses from a customer service representative on the Regretsy Facebook page. One post showed some level of paranoia that April was trying to cheat the system and break PayPal from the inside.

More disturbing was this response.

I mention context all the time on the web. You can't just isolate a contemptuous comment like that--suggesting that it's ok to help sick cats but not ok to help poor children--and just assume that someone is in the wrong. We didn't immediately know who brought up the sick cat metaphor.

Didn't. As in past tense.

April posted a series of exchanges between her and the PayPal customer service representative last night. NSFW language. Here are some of the highlights, with commentary, from the man representing PayPal as they steal Christmas from impoverished families.

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.

I haven't seen the PDF, either. What I have seen are the 50 pages of instructions for using the Donate button that mention absolutely nothing about "worthy causes" or any regulation over an individual or registered business using the button. All of those documents are uploaded here: 1 2 3 4 5. This was their status yesterday when April was told to use the "Buy Now" button for the charity drive. This way, we at least have a record of what PayPal's policies actually stated when this happened before they can change their policies and lie about what they said yesterday.

Green Geeks did a fantastic job breaking down how PayPal's response to the legality of the charity drive does not relate to any PayPal policies.

Let's take a look at some of that paranoia I was talking about in full context.

PAYPAL: The only way you’d be allowed to sell these as gifts is if you sent them directly to the person who bought them. And we will track your shipments and make sure it goes to the buyer. ME: That’s discriminatory! You don’t make other retailers send purchases to the buyer only, especially not at Christmas. PAYPAL: No one but a nonprofit would send gifts to someone else on buyer’s behalf. ME: What about Amazon? PAYPAL: We know what you’re doing and we’re through playing games with you.

So the PayPal representative is now a psychic who knows April's full intentions. That's right. "[He knows] what [she's] doing" and it sickens him. How dare April try to give children a merry Christmas when she could be funding sick cat care through her site?

Cynicism aside, in all of April's exchanges with PayPal over this, not one person explained what, exactly, they were accusing her of doing. Obviously, they think a toy drive is a scam. Even though she's used their service for years to raise money through sales, donations, and an Etsy charity shop to send cash money to individual people, it's the inclusion of toys that pushes this into scam territory.

The customer service representative has shown a severe lack of knowledge about how online commerce works. Amazon, as April pointed out, offers gift delivery service. They have also, in the past, sent free gifts to children in need. For example, One Laptop per Child partnered with Amazon to do a buy one, send one sale maybe a year or so ago. That meant that for every laptop someone purchased for their own child, One Laptop per Child would send one laptop to a school in Africa. True, they are a non-profit organization, but they were selling products and sending products using the same commerce accounts.

However, in that exchange, Amazon earned nothing on the free laptops. They lost out on fees for charity. If they did not have their own payment system in place, PayPal could have frozen the entirety of Amazon's funds--which would include refunds for transactions that did not go properly, employee pay, and upkeep costs--because "[they] know what you're doing." Apparently that's the official version of "You're going in time out right now, young lady/man."

Being able to buy an item and send another as a gift is a common marketing strategy for infomercials, eBooks, software, computer accessories, toys, and all sorts of products. Gift wrapping and gift delivery services are standard on all major ecommerce sites. Regretsy did nothing out of the ordinary by offering to send free toys to children in need.

Here's the cream of the crop of how out of touch with reality this PayPal representative is in his discussion with April Winchell.

PAYPAL: You say you’re selling these as gifts but there is no information as to what the gift is. ME: People sell mystery gifts and grab bags all the time. What about sites where they say, let us choose for you?” PAYPAL: It doesn’t say that on your site. ME: Is that the problem? If I say it’s a mystery gift would that be sufficient? PAYPAL: You aren’t going to be able to get around this. It’s too late, we know what you’re trying to do and we’re not going to let you do it. ME: But there are hundreds of toys! Do you think it’s reasonable to create a drop down menu for hundreds of gifts, all of them different, and create an inventory for each as “one?” So that every time one sells, it’s sold out, and the customer has to keep choosng options and going through check out to see if they can find a gift that’s still available? PAYPAL: Yes, I think it’s reasonable.

This man believes that having to set up a separate website (mentioned in another part of the discussion) and creating hundreds of listings for hundreds of mystery toys is a reasonable job. He wants to force families that were in dire enough straights to ask for a handout from a humor website to identify themselves and presumably pay for a mystery gift that they already received confirmation for. The Letters from Santa have all been delivered. The children are waiting for their gifts. PayPal wants each person to have to wait in line as the mystery gifts are listed one by one on a brand new website because "[he knows] what [she's] trying to do and [he won't] let [her] do it."

It only gets better. You know how you ask to speak to a supervisor when a customer service representative has crossed the line of good decorum and refuses to answer your questions? Good luck doing that with PayPal.

At this point, I asked to speak to a supervisor and was told that “No one above me will talk to you. No one at my level ever makes phone calls. We’re only doing this to help you.”

Did he ask anyone else? No. He just said said no. I don't care how high up he is on the food chain. The correct customer service response is "let me see who is available" or "I'm sorry, my supervisor isn't available right now. She'll be back [time]. Here's her extension." We've crossed the line from carelessness and blindly toting PayPal's unspecified policies (that routinely contradicted each other in these exchanges) to not following the employee handbook. I'm pretty sure PayPal does not encourage its workers to shut down communications when a customer is not being abusive and refuse to do their job.

And how, pray tell, is April supposed to resolve her issues with PayPal since no one else will speak with her?

When I asked how to close my account, he said I 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.”

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.

Let's go through the end game according to this PayPal representative. April needs to apologize to PayPal admitting that she knew she was doing some unspecified "WRONG" thing. She needs to refund all of the money that was taken in doing this "wrong" thing. However, she can't refund the money for six months because they've frozen her account to stop her from using the money. So in June, she can refund hundreds upon hundreds of $2 donations that PayPal is earning money on so she can close her account, open a new one, and finish off the Secret Santa project with the "Buy Now" button.

This is not some attempt by PayPal to enforce company policy. This is an attempt by PayPal to earn a whole lot of money. I don't know what interest rate PayPal collects on funds in an account, but they have $3000+ of unspent charity money frozen to profit off of for six months. They also have the transaction fees for three charity drives (the initial $4000 for toy purchases, the expanded $3000 for gifts to the families, and the second attempt at the $3000 for gifts to the families). That's $10,000 in fees PayPal racked up without even lifting a finger in less than a week.

So what can you do with this information? Spread it to everyone you know. Share the Regretsy post if they can handle NSFW language. Share The Consumerist report that breaks down everything up to the late night customer service conversation last night. Share the Green Geeks blog post explaining how PayPal has no policies that allow them to enforce their policies. Retweet the celebrity tweets by Wil Wheaton and Neil Gaiman. Even share this ruddy blog post if it makes you happy.

You can also contact PayPal to express your dissatisfaction with their actions. I drafted a form letter at Regretsy last night and vetted the available e-mail contacts at PayPal from The Consumerist page to find the ones that didn't bounce back immediately. Feel free to copy, paste, and alter the content how you see fit.,,,,,,,,,,,,,,,,,,,,,,,,,

I’m trying to understand what your company expects to get out of denying a registered business, Radio Savant Productions, Inc., the ability to raise funds to purchase gifts for children at Christmas. I have scoured your policies and found NOTHING that correlates with the following official message from your customer service representatives to Radio Savant Productions, Inc.

“You can raise money to help your sick cat, for example, but not poor people.”

That is a direct quote from one of your representatives. Your behavior disgusts me. You shut down a charity drive not once, but twice. Here was your response to the second attempt that followed your policies as laid out when the last charity drive was shut down.


Your policies clearly state that only charities and non-profit organizations are up for review of any use of the "Donate" button on PayPal. Radio Savant Productions, Inc. is neither. It is a corporation that donates proceeds from their sales to people in need. Since they are not a registered charity or non-profit organization, you had no right--per your own policies--to freeze their account and destroy Christmas for hundreds of children.

As a concerned customer who donated to this charity drive, I will be contacting all of the editorial departments at major newspapers in the country and even go after television news stations I can find the contact information for. I will be contacting any site I know that uses your service to strongly encourage them to stop using PayPal as their primary payment option. There are enough reputable competitors that don’t discriminate against charitable acts by small businesses.

The easiest solution is to issue an apology, allow the charity drive to go through, and update your policies and website design to reflect your pro cat/anti-poor people policies. All you are doing now is angering your customers and destroying your reputation. Do you really want to be the company that ruined Christmas for hundreds of needy children?

With great disgust,


You can also write a letter to PayPal president Scott Thompson at the following address:

Scott Thompson President PayPal 2211 N. First Street San Jose, CA 95131

You can fax the letter here: 1-408-376-7514 (FAX Number — General office)

And call them directly here: 1-402-935-2050 (PayPal Customer Service)

Here: 1-888-215-5506 (Another PayPal Customer Service Number)

And here: 1-888-221-1161 (Another PayPal Customer Service Number)

You can tweet them here: @paypal

The goal here is to remain professional but inundate PayPal with negative responses to their poor decision making. They broke their own policies here and made up new rules as they went along. This customer service representative clearly took any attempt to push the charity drive through as a personal attack and vindictively froze all of April Winchell's income for six months to teach her a lesson. Of course, since he refused to specify what, exactly, she did wrong, there is no lesson to learn.

The other important thing you can do is remember this feeling of rage caused by the thought of children going without joy this holiday season. Pick up a toy for a local drive, donate to your favorite charity, and do what you can to take April's ambitions to help the needy and apply them in your own life. I'll be swinging by the local Five Below later today to pick up some board games, action figures, and dolls to donate to the local police force's annual charity drive. I can only hope other people decide to bring a smile to children's faces in the wake of PayPal's Grinch-like behavior.

UPDATE: PayPal has unfrozen the account and given a donation to the charity drive. They're also lying their butts off to cover for what they did.

Now is not the time to back down from this. They are still blaming the victim and recusing themselves from any responsibility.

Contact all those people again and demand a proper apology. Also, use the Contact Us form at their blog to send the message directly to their writers. This rhetoric is just as offensive as the paranoia and pro-sick cat/anti-poor children stance taken last night.

Here's a sample of what you can write to them:

Your blog post regarding the resolution of your theft of Regretsy charity funds blames the victims of your actions. It does nothing to acknowledge the horrid customer service that said poor children were not a worthwhile cause.

Perhaps you are not aware of what, exactly, your customer service representative said to April Winchell last night. She detailed her experience, with direct quotes from your representative, at her blog:

And maybe you need a refresher on your "clear" policies that are anything but. There is nothing in your policies detailing required paperwork for a business or individual to use the Donate button. All specified information refers to registered charities and non-profit organizations:

This issue will not go away until you actually apologize for what you did last night. I was happy spreading the word to get that money freed up last night. Now I'm going after newpapers, magazine, television, and radio coverage for your horrible customer service and PR decisions. Blaming someone else for your mistakes is never good customer service.

The Link Rally: 6 December 2011

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