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Paypal Almost Ruins Christmas For Regretsy's Social Good Program

As one of the more popular sites on the web, Regretsy has been serving up a delightful mix of the sublime and the ridiculous since its inception. Calling itself a “fail blog of crafts”, the site searches Etsy (no affiliation between the two, mind you) and other sites for the best of the worst crafts currently for sale. If you want to lose a day or two to laughter, I highly recommend checking the site out.

This holiday season Regretsy decided to do some good and create a Secret Santa for kids in need, and it urged its readers to donate $2 at a time to help these kids out. They used Paypal’s “Donate” button as a way to collect donations.

That’s when things started to go wrong.

Apparently, only certified non-profit organizations are allowed to use the Paypal donate button (a fact that might be quite a shock to hundreds of bloggers I know that have a “Donate” button on their sites). According to a post on Regretsy, they received this email from Paypal stating this policy (which is apparently not clearly indicated anywhere on Paypal’s site):

PayPal permits the donation button to be used by verified non-profit organizations. PayPal also permits donations to the accounts of individuals or organizations that are authorized to fundraise on behalf of verified non-profit organizations.

Paypal then demanded that Regretsy manually refund every single $2 donation thousands of dollars worth immediately. Best part? Paypal keeps all the processing fees.

Yep.

As you can imagine, the folks at Regretsy were not happy (as this post indicates). It didn’t take long for the outrage to go viral with Mashable and the San Francisco Chronicle, among others, talking about Paypal’s fail. Paypal responded on their blog and are now addressing the issue, thankfully:

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 making a donation to Regretsy to help their cause, and we’re truly sorry this occurred.

It’s unfortunate that it took the wrath of the internet to resolve this issue, but not terribly surprising. Until a viable competitor to Paypal exists, however, it’s likely that Regretsy will be stuck working with Paypal for now.

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