Why @PayPal is wrong regarding @Regretsy, according to their own policies.

Whether you love or hate Regretsy, only the most insane conspiracy theorists can deny that Regretsy and the Regretsy community do some kickass charitable giving. This year, April Winchell, the Queen of our fat jealous loser brigade at Regretsy, organized a charitable drive for needy children to get Christmas gifts. She popped a “donate” button on her blog, and the donations started pouring in–so much so that April announced that there would be even more giving.  Oh, such giving there would be.

Then this happened.

Take a minute to go read it, seriously. Then come back.

If you didn’t take a minute to go read it, here’s an inappropriate, dramatic interpretation of what happened:

PayBuddy: Hey, dude, you can’t use that button on your website. Cos, like, you’re not a charity or whatever.

April: Oh, shit, my bad.

PayBuddy: Yeah, you’re going to have to manually refund all of the transactions.

April: … that’s, like, so many transactions. Okay, I’ll do it. (aside) Hmm, I still need the money to make sure these families have an awesome Christmas. Since I can’t use the donate button unless I am a charity I was told that I can’t use the donate button unless I am a charity, I will use a “buy now” button and people can buy the gifts.  Off I go to my website to correct this honest mistake!

[Next day]

PayBuddy: Um, yeah, so . . . . you can’t do that either. You are going to have to refund all of the money you collected last night.

April: WHAT.

PayBuddy: You’re not really selling specific items? So like, um, it’s still the same thing with a different button? and you’re not a charity? So, we’re kind of onto your sneaky, underhanded generosity, and like, even though all we said yesterday was that you can’t use the donate button because you’re not a charity, we’re telling you now that you also can’t do charity through the buy now button.

April: ……… Okay, I really don’t get this. I see donate buttons every-damn-where, and a lot of them are not charities.

PayBuddy: Oh, non-charities can totally use the donate button, just not for charity. You can raise money to help your sick cat, for example, but not poor people. (NOTE: THE LAST SENTENCE WAS ACTUALLY UTTERED BY A REPRESENTATIVE)

April: Um. Can I speak to your supervisor?

PayBuddy: 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. (NOTE: This is another one that was actually uttered by a representative. Caps emphasis mine.)

April: … can I individually sell each individual toy on my website? Then send them to the needy families?

PayBuddy: AS IF. No website is going to let you BUY something and have it sent to a person who isn’t YOU! [Except, of course, almost every website that will send items as gifts.--GGG] Besides, if you want to sell them individually, you’ll have to do it from a whole new website. And also I think this is all very reasonable of us, considering how clear and understandable our policies about charitable giving are, and how easy they are to find from the pages that are pushing you to use a donate button for your website. [Hint: they're not. Which you will see soon.--GGG]

April’s head explodes.

PayBuddy: Oh, hey, P.S.? We’re totally keeping all of the fees we assessed for each donation that you’re refunding. I’m going to make a big pile out of that money to lay on while I sodomize your corpse. [Not actually said by PayPal representative, but in my opinion, strongly implied.]

FIN

Now, because we who populate the comments section of Regretsy are a bunch of hateful, spiteful assholes, by all accounts from people who are too good to deign to visit such a nasty website, the next logical step was for us to lash out at PayPal, bringing our fat, jealous loser-wrath down upon their heads. As some people tried to point out on Twitter, Regretsy clearly violated PayPal’s Acceptable Use Agreement and therefore, we should stuff our butthurt and shut the hell up about it.

Except that, while I am not a lawyer, I’m pretty sure that Regretsy didn’t violate the AUP at all and that PayPal owes April and all of the families whose Christmases aren’t going to be as good as they were a few days ago a raging apology.

Evidence after the jump.

Exhibit A:

From PayPal's help center. (blue highlights mine)(click to enlarge)

Notice the language used in this section, taken from the Help Center (I searched “donate”). Approval is needed before your charity accepts PayPal donations; donations not associated with a charity or nonprofit organization don’t need to meet these requirements. This requires people to provide proof of tax-exempt status, something that a charitable organization would need to do, sure. But it doesn’t say anything about charitable activity by a non-charity or for-profit entity, or say anything about donations associated with charitable activity (as opposed to a charitable organization). In fact, if you’re not associated with a charity, then you don’t need to meet those requirements (even though PayPal made April submit a mountain of paperwork and probably also a urine sample–I wouldn’t put it past them).

It does say, “Donations must also follow our Acceptable Use Policies.” Hrm.

Exhibit B:

PayPal's Acceptable Use Policy (blue highlight mine)(click to enlarge)

Firstly, I would like to note that the certain services set out in 6 are related to gambling and games of chance, so not applicable here.

PayPal busted Regretsy for collecting donations for charity. But read the language closely again–it says collecting donations as a charity, not for charity, requires pre-approval. Regretsy does have a charitable fund, but Regretsy is not a charity. In fact, in an e-mail to April that she posted here, PayPal themselves said this:

It appears that your PayPal account belongs to a corporation, and not a non-profit organization.

So, Regretsy is clearly not a charity. None of the other stuff in that paragraph or the one below applies to them, either, unless she was sending Christmas escorts and peppermint Schnapps to the needy children.

Now, as an interested party who likes to have all of my facts before I get apeshit insanely angry about huge companies stealing Christmas from children, I tried to find out as much as I can about this donate button. I went to the help center and searched.

Exhibit C:

Search for "donate" ("donations" brings up the same links)(click to enlarge)

Searching both “donate” and “donation” brings up the same five links official PayPal Help Center links (I scrolled through quite a few of the forum posts and they didn’t have any relevant information that I saw–except for an almost-interesting post that I’ll unveil in a bit). I figured if there’s anything pertinent about the donate button, it should be able to be found by searching those two terms. Just to be safe, I also searched “charity,” and it came up with three links, all of which are on this list.

Now, if something were so important to be done correctly that a mistake would cause tens of thousands of dollars to be frozen and inaccessible, thereby potentially ruining someone’s life (or in this case, lots of someones’ Christmasses), I’d make damn sure that the policies in place were clearly spelled out, easy to access, and not open in the slightest to interpretation. And if I did that, I would not be PayPal.

The first and last links are irrelevant to this matter. “What can I do with PayPal?” is full of rah-rah “Use PayPal YAAAAAY” language, and I already posted “How does PayPal approve charities and nonprofit organizations?”  Just for shits and giggles, here’s the last one that hasn’t been discussed:

"How can my charity or nonprofit use PayPal to collect donations?" from PayPal's Help Center(click to enlarge)

Put yourself in the shoes of a person who is trying to wade through PayPal to see if they can use the donate button for a toy drive. You’ve discovered that you have to get pre-approval only if you are a charity or a nonprofit–you’re not, so you’re okay there. In the short list of things that must receive prior approval–or are altogether verboten–collecting for charitable acts by a for-profit corporation isn’t covered at all, much less against the Acceptable Use Policy. So you figure, okay, I’m good to go.  You go to get your button:

PayPal - Donate Button (click to enlarge)

Now, if there were some pretty serious restrictions on using the Donate Button, ones that could cause a small fortune of someone’s money to be tied up for half a year, you’d think they might mention something here. Nope. It’s all about how easy it is to use the donate button! And you’re jazzed about the donate button, so you click it and go to the next screen, where there is a handy-dandy little pop-up that says “Which button should I choose?” If there was any confusion, it should be cleared up momentarily:

Which button, PayPal?? (red underline and blue highlight mine) (click to enlarge)

There was totally nothing on this screen about serious business restrictions to the donate button, not even an asterisk to indicate that there is more information that I need to know before committing to the Donate button. I looked. I scoured. Nothing. All of the PayPal tips, in fact, seem to be geared toward how easy it is to pop one of those suckers on your website, especially if you’re not a charity or not a nonprofit, neither of which Regretsy is.

Remember when I said there was really only one semi-interesting forum post (from a PayPal representative) that I found? It’s not that interesting but you can see it:

When she says "no specific thresholds", I believe she is talking about dollar amounts.

You can see that PayPal_Olivia is pretty damn enthusiastic about telling those people that they can use the donate button. She doesn’t mention any specific guidelines, but does mention that they are subject to review (otherwise known as CYA). Hey, PayPal, here’s a thought–why not set forth some additional concrete guidelines in order to prevent a small fortune of legitimately-collected and -earned money from being tied up for half a year?

This is the case for Regretsy, and I’m no lawyer–I don’t even play one on TV–but I think it’s a pretty decent one. I would like to say that I understand PayPal’s need to be a little on the paranoid side; after all, if people get taken advantage of due to lax rules, and they don’t have proper policies in place, they are the ones who get screwed and stuck with the bill. They are also the ones who lose customers in droves if their security isn’t tighter than Fred Phelps’ asshole in a gay bar. Here’s the problem, though: the reasons they gave April are not their actual policies. If you run an institution where you have that much control over a person’s money, and thus their livelihood, you cannot just make up policies as you go along. What would happen if I went to my bank and tried to withdraw money, and they said, “What’cha using this withdrawal for today?” and I said, “Oh, I collected and deposited a bunch of donations and I’m going to buy toys for a toy drive” and the teller said, “Oh yeah . . . no . . . see, you can’t do that. Because you’re not a charity and you can’t use our bank services for charity.”  I’m pretty sure I would instantly gain the power of head explody.

I can even see them needing to refund the transactions, but freezing the account? PayPal shouldn’t be able to do that. Especially when they made up a bunch of bullshit fake policies that aren’t even in their AUP.  But even if a user did violate the AUP, 1) six months is excessive when some solely live off of income from the internet, and 2) transactions which didn’t violate the AUP shouldn’t be frozen and those funds should be accessible. It’s your money. What right does PayPal have to freeze your whole account or prevent you from accessing legitimately-earned money when you paid your fees for the services? You paid for the service, it’s legitimate, it’s your money now–not theirs.

PayPal, own up to this and fix it. You made a mistake per your own terms of use. Your representative clearly stepped outside of their bounds when handling this matter by making up false policies and taking overly-aggressive action. Make it right, because I have to tell you, there are a lot of people who are already fed up with your seemingly-excessive fees and overreactions to honest mistakes; you don’t have a hardcore loyal following and a lot of people are just waiting for any excuse to be done with you. Don’t let this be the reason.

Update: I realized I didn’t include their regular AUP. With the exception of “the sale of certain items” that the seller doesn’t have–which doesn’t apply because this wasn’t originally a sale but a donation–there’s really nothing here that applies that I can see. Unless, again, she was taking donations for holiday hookers and other illegal items while sucking everyone into a sadistic Christmas ponzi scheme. But see for yourself:

PayPal Acceptable Use Policies, accessed 12/6/11 (click to enlarge)

Update: New screencaps.

Another one that explicitly says you can use the donate button if you're not NPO, you just don't get the discount. (Click to enlarge)

I found this one very, very interesting. (click to enlarge)

When you put “reasonably” and “potentially” together, that is a whole mess of uncertainty. They don’t have to be reasonably certain that they ARE fraudulent, just that they are potentially fraudulent. And section k.–if they suspect that the way you’re doing business MAY result in complaints, but haven’t actually resulted in complaints, they can still shut you down? Or can they shut you down for a handful of complaints amid a sea of otherwise good business? This is a WHOLE LOT of subjectivity for a company that is in charge of the livelihoods of many small businesses. Can we not get a clearer set of rules than that for conducting business–and a clear path of recourse for when a mistake has been made?

Unsettling.

Update (12/7/11): And if you weren’t yet convinced, @teamdillinger brings us this glorious tidbit in an e-mail from PayPal’s customer service. She says in the comments, “I decided after this to email Paypal asking for the actual policies on using the donation button, making up a reason for why I wanted to use it. The response I received was mostly filled with how to put the button on my website, which is not at all what I asked for. Adding a link doesn’t exactly mean the same thing as asking for policies. But there was something notable in the email I received, and I’ve screencapped and highlighted it here:

PayPal email to @teamdillinger (click to enlarge)

I really don’t see how it can get clearer than that, although someone on Twitter is still fighting me on this. I’m seriously wondering if I’m getting trolled by that guy. (It’s hard for me to tell these things.)

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