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"PayPal is taking an online beating after allegedly shutting down an account for a charitable gift buying program run by the popular \"craft fail blog,\" Regretsy.\nRegretsy was organizing a holiday gift exchange in which its readers could buy toys for about 200 underprivileged children, selected from applications.\nThe payments company, according to a Regretsy blog post, first froze the account due to a supposed misuse of the \"Donate\" payment button. The blog was told that it had to be a nonprofit in order to use the button. It isn't, so it then attempted to collect money for toys by using a regular payment button and allowed the buyers to send purchased gifts to the 200 children. \nAfter what the blog post calls \"a very long and jaw-dropping conversation with an incredibly condescending representative,\" this approach was also shut down. PayPal required that unprocessed orders be refunded \u2014 and then kept all of the transaction fees.\nRegretsy, which earns its traffic by bashing handmade goods, quickly proved that it was not a good company to mess with. It has not restrained itself in the two blog posts it has written about the incident: one titled simply, \"F**k You, PayPal\", and a second that has garnered more than 1,000 comments. \nFor instance, one commenter on PayPal's Facebook page took the opportunity to adjust the full lyrics to You're a Mean One, Mr. Grinch for the occasion, replacing \"Mr. Grinch\" with \"Paygrinch.\"\nOther blogs and visitors to PayPal's Facebook page have rallied with commensurate rage. News outlets' headlines have accused PayPal of \"Ruin[ing] Christmas for Over 200 Kids,\" \"Royally Screw[ing] This Company And All The Kids It Was Helping\" and \"Kill[ing] Christmas.\"\n\n\nAn excerpt from Regretsy's account of a conversation with PayPal customer service.\n\nPayPal's site doesn't clearly ban the actions that Regretsy says got its account shut down. That doesn't help the payment service's case. Nor does the fact that Regretsy included in its blog posts damning snippets from what it says were conversations with PayPal's customer representatives. (For example: \"You can use the donate button to raise money for a sick cat, but not poor people.\")\nAs the author of Geek Girl eloquently points out, PayPal's help center actually clarifies that donations that are not part of a nonprofit organization don't need to apply for approval to use the \"Donate\" button. In other words, according to PayPal's own customer-facing guidebook, what Regretsy says it heard from Paypal's customer service representative was wrong.\nUPDATE: PayPal confirmed to Mashable that Regretsy's funds \"have been released.\"\nUPDATE: PayPal's Director of Communications, Anuj Nayar, made this statement on PayPal's blog:\nLast night we became aware of an issue with one of our account holders, Regretsy.com. Though we can\u2019t 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\u2019re truly sorry this occurred.For background, we have clear guidelines for any business that 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. We do this to protect our customers and to protect our business.  As a regulated payment service, we\u2019re 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 \u2013 both donors and recipients; and buyers and sellers. In this instance, we recognized our error and moved as swiftly as possible to fix it.\nDoes that apology cut it? Let us know your thoughts in the comments. \n\n\n\n\nImage courtesy of istockphoto, RedBarnStudio"^^<http://www.w3.org/2001/XMLSchema#string>
<http://mashable.com/2011/12/06/paypal-regretsy/>