For those unfamiliar, Regretsy is primarily a humor site for people to post about ridiculous and bizarre items for sale on the craft site Etsy. They also have a long history of using their sales and other special events to help those in need.
This year, they decided to run a "Secret Santa" campaign to collect money and toys for children in need. So many people donated that they found themselves in a position to make a sizable contribution to each family in addition to the toys... until PayPal shut it down.
Due to unclear instructions, Regretsy used a "Donate" button instead of a "Buy" button to collect the donations. Since they are not a charity, PayPal shut down the effort and made them return all the donations... while keeping the transaction fees. When Regretsy tried to get clarification, PayPal stated that the Donate button can be used for "worthy" causes, such as donating to help "a sick cat," but not to raise money for poor people (which does not count as a worthy cause, apparently).
Since the toys were already purchased and delivered to the Regretsy office, Regretsy tried to remedy the situation by "selling" them individually--the kind-hearted customer pays for the toy, and then Regretsy can send it to the family for which it was originally destined. PayPal shut this down as well, again making them refund the money while keeping the transaction fees. They also stated that Regretsy would not be allowed to ship any sold item to any address other than the payment address. Repeated attempts to address the situation with customer support were met with "We know what you're doing, and we're not going to let you do it. There is no way around this."
Then, PayPal froze the Regretsy account, as well as the organizer's personal account for her book sales. In the last 24 hours, PayPal's Facebook page has been flooded with angry users.
So, to recap:
- Regretsy set up a Secret Santa program, where customers could donate money to help buy toys for 200 needy families that Regretsy had previously vetted.
- The program was a smashing success, and brought in so much money that they made preparations to contribute money for holiday meals alongside the toys.
- Because Regretsy had accidentally used a "Donate" button instead of a "Buy" button (and is not a charity), PayPal made them refund all the money--and kept the transaction fees they had collected.
- Since the toys had already been ordered and delivered to the office, Regretsy attempted to "sell" each one individually so that customers could fund an individual donation.
- PayPal shut this effort down as well, again making them refund the money and keeping the transaction fees. They also stated that they would be tracking all shipments from there on out, and Regretsy would not be allowed to ship any product to an address other than the verified payment address (in other words: you can't buy something for someone else).
- PayPal then took the further step of freezing the organizer's personal account, as well as the account used to collect the donations. As a result, Regretsy has had to pay for a significant portion of the effort out of pocket, has been blocked from revenue from a completely unrelated account, and will no longer be able to make the monetary donations.
Merry Christmas, everyone.
Why don't you let PayPal know how you feel? Remember to be polite!
3:25 AM PT: There is now a Change.org petition asking the President of PayPal to unfreeze the account.
4:25 AM PT: And now we have another well-researched article detailing how convoluted PayPal's policy is, and why they were incorrect in stopping Regretsy in the first place.
11:46 AM PT: FINAL UPDATE: The Internet wins again! Thanks to readers hyperbolic pants explosion and Laughing Virgil in the comments who tipped me off to this late-breaking development:
"Last night we became aware of an issue with one of our account holders, Regretsy.com. Though we can’t comment specifically on the account due to our privacy policy, 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."
As reader caul commented, the "Internet acted like the equivalent of Scrooge's ghosts."
Say whatever else you will about the things that have happened this year: 2011 has been an amazing, running example of the power of populist activism when properly applied.
1:07 PM PT: THE SAGA CONTINUES: Despite PayPal's public statement, Regretsy has not yet been contacted by PayPal regarding the donation or the unfreezing of accounts. Hopefully it's just a matter of PR rushing the announcement out before they'd had time to make the call... but keep the pressure up until they follow through on their promise!
2:19 PM PT: from Regretsy's Twitter feed: "Just spoke to Paypal, very encouraging conversation. Will post an update soon, but they get it and are finally trying to make it right."