PayPal has yanked its Donate button from a toy drive for children whose parents can't afford to get them any gifts this holiday season.
Regretsy.com set up a form for parents going through tough financial times. The parents could apply to be included in the gift exchange program. The tongue-in-cheek Regretsy.com is a site/network that has the stated purposes of: 1) To make you laugh; 2) To raise money for charity; 3) To help sell the weird crap we feature.
More than 200 children were to receive a gift and a letter from Santa via the toy drive. In an exchange (below) with PayPal, the site was told "Donate" could be used for sick cats, but not poor kids.
The site used the "Donate" button, and not the "Buy Now" button ... and that prompted PayPal to not only pull the Donate button, but to force the site's owner to refund the donated money.
The campaign aimed to raise $4,000 -- and it hit the mark in a few hours, according to Jezebel.com. The site's owner, April Winchell, began buying toys -- then realized she had enough donations that she could send some cash to the parents, as well.
That got kiboshed by PayPal, too. Then Winchell's personal account was suspended. There seem to be two catches here. First, the Donate button can be used for "worthy causes" according to PayPal's terms of service. Second, PayPal gets a fee for all transactions -- and its keeping those fees from the donations, according to Regretsy.
Update: PayPal is circulating the following statement regarding this incident, discovered on VentureBeat.com:
For reference, we have clear guidelines for any business who uses PayPal to accept donations. 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. As a regulated payment service, we’re also required by law to follow these guidelines.
We appreciate that this can be an inconvenience, but we have a responsibility to all our customers – both donors and recipients; or buyers and sellers. In this instance, we recognized our error and moved as swiftly as possible to fix it.
Winchell was able to get the toys ordered, using the Buy Now button, but no cash can go to families. Santa is still writing letters, too.
Three exchanges between Winchell and a PayPal represented is excerpted on Regretsy. Here's one that's telling of the tone:
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.
Winchell also provided her version of the events in a 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
The comment section on Regretsy is getting "adult" in its tone, but more than 1,150 comments have been left at the time of this posting.