For PayPal, It Pays to Give

PayPal recently fielded some criticism when it shut down an account from a humor blog that was collecting donations in order to buy holiday gifts for needy children, but was nimble enough to quickly turn the negative attention into a brand-building opportunity.

On Dec. 1, humor blog Regretsy announced that 200 needy children would be the recipients of holiday gifts via a Secret Santa charity drive, and put out a call for donations to its audience. April Winchell, the comedian who runs the blog, wrote in a blog post that the program received thousands of dollars in donations within the first few hours.

The good news came to an abrupt halt, on Dec. 5. That day, Winchell, in a blog entry, described an exchange she had with a “condescending representative” from PayPal who notified her that the company was freezing her account because she had used PayPal's “Donate” button, which is only available for use by nonprofits. When she came up with a plan to circumvent PayPal’s donations rules by returning the funds to donors and then pretending to sell the gifts to donors in order to receive the funds again, the rep said that would also violate the rules and kept the account frozen.

That did not sit well with Winchell, her audience and the public at large as the story went viral—eventually making Regretsy one of the top 10 trending topics on Twitter in the U.S. on Dec. 6.

The day after Winchell’s critical blog post went live, Anuj Nayar, director of communications at PayPal, via a statement on the company’s blog, announced, “We can confirm that the funds have been released and we are working directly with the account holder on this matter…We are working with Regretsy to make a donation to help their cause, and we’re truly sorry this occurred.”

Not only had the company apologized to Winchell, it took the extra step to pledge a donation to the charitable cause. In the spirit of the holiday season, PayPal showed that it's willing to bend its own rules a bit—and in so doing went from Grinch to do-gooder.

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