Forward to next post: Krugman is from Trantor; Gingrich ain’t
As you’ve probably heard today, PayPal shut down, trashed, and ripped off Regretsy’s holiday toys-for-kids drive for reasons that don’t match anything PayPal says on its site about how its procedures work. They also arbitrarily froze April Winchell’s personal account and told her they’d be holding that money for six months, for no reason I can see beyond punishing her for questioning their handling of the matter. This is actually a dumber and more negligent move than than The Great Sock-Yarn-of-the-Month Banking Outrage of ‘07.
Read April Winchell’s (“Helen Killer’s”) short but punchy account of what went down: Cats 1, Kids 0.
GreenGeekGirl has an excellent analysis in depth of what PayPal claimed vs. the information that’s available on their site. Upshot: the guidelines and policies PayPal invoked while screwing over Regretsy appear nowhere on their site.
The last paragraph of the initial post on Regretsy:
Wanna tell Paypal how you feel? Here’s a list of every administrative Paypal email address and phone number The Consumerist was able to find.Good idea, that.
This is a nontrivial issue. A lot of people who make their living from internet businesses process all their transactions through PayPal. So do lots of charities and fundraising operations. It’s unavoidable. PayPal is the 600-pound gorilla of online consumer payment transfers.
Because they have such a dominant position, it’s grossly inappropriate for PayPal’s policies to be this haphazard and self-serving. It’s likewise inappropriate for them to exercise so little oversight when they’ve given high-handed individual employees of theirs the power to put entire operations out of business, or bankrupt craftspeople and small business owners. As for arbitrarily freezing customer accounts for half a year, which gives them the interest-free use of that customer’s money for the duration, it’s at minimum a conflict of interest.
Pass it on. Make noise. And if you receive payments via PayPal and have been letting them accumulate in your account, consider transferring every penny you don’t need to have there to some other financial institution.
I’d like to talk about some other disturbing features of PayPal’s interaction with Regretsy. First, an excerpt from Regretsy’s writeup:
Here are a few highlights from our conversation:That PayPal representative is a known type, one I’ve run into before: the person who is compulsively unable to admit that they’ve made an error. They’re not all that common, thank goodness, but the times when you run into them are memorable.
YOU CAN ONLY HELP CATS
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.
YOU HAVE TO START A NEW WEBSITE
ME: The problem is I’ve already bought all of these toys, so now I’m really in a position like any other merchant—which is to say, I have inventory I need to sell. Why can’t I sell them as gifts, like any other retailer?
PAYPAL: Don’t you think it would look suspicious if the same people bought them again?
ME: Why? These are my customers!
PAYPAL: If you wanted to do that, you’d have to start a new website.
ME: What? Why would I start a new website?
PAYPAL: I’m not going to argue with you.
WE WILL TRACK YOUR SHIPMENTS
PAYPAL: The only way you’d be allowed to sell these as gifts is if you sent them directly to the person who bought them. And we will track your shipments and make sure it goes to the buyer.
ME: That’s discriminatory! You don’t make other retailers send purchases to the buyer only, especially not at Christmas.
PAYPAL: No one but a nonprofit would send gifts to someone else on buyer’s behalf.
ME: What about Amazon?
PAYPAL: We know what you’re doing and we’re through playing games with you.
YOU’LL NEVER GET AWAY WITH THIS
PAYPAL: You say you’re selling these as gifts but there is no information as to what the gift is.
ME: People sell mystery gifts and grab bags all the time. What about sites where they say, let us choose for you?”
PAYPAL: It doesn’t say that on your site.
ME: Is that the problem? If I say it’s a mystery gift would that be sufficient?
PAYPAL: You aren’t going to be able to get around this. It’s too late, we know what you’re trying to do and we’re not going to let you do it.
ME: But there are hundreds of toys! Do you think it’s reasonable to create a drop down menu for hundreds of gifts, all of them different, and create an inventory for each as “one?” So that every time one sells, it’s sold out, and the customer has to keep choosng options and going through check out to see if they can find a gift that’s still available?
PAYPAL: Yes, I think it’s reasonable.
Then my brain exploded.
At this point, I asked to speak to a supervisor and was told that “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.”
When I asked how to close my account, he said I had to “refund everything, write a letter saying you understood what you did WAS WRONG AND YOU WILL NEVER DO IT AGAIN, and then request permission to close your account.”
Then, for good measure, they froze my personal account, which has revenue from my book sales, e-books and all the other Finnish Folktales Swag. They’ll be holding that money for 6 months.
People with that quirk generate seriously malformed interactions. Their compulsion to deny making even trivial errors leads them into cascades of unplanned lying, which means they have to fight harder and harder to defend increasingly indefensible and eventually downright weird positions. They’re like the cognitive equivalent of drivers who panic when the police try to pull them over for a broken tail light and wind up in high-speed chases that draw felony charges.
My guess is that the entire episode grew out of single initial error: the PayPal guy’s claim that the Donate button can only be used by a nonprofit. Because he couldn’t admit his mistake and move on, and because April Winchell kept calling him on his bogus explanations faster than he could make up new ones, he had to keep raising the stakes on her.
At the point that his inventiveness failed him, he fell back on the language and tactics of a habitual abuser: I’m not going to argue with you. We know what you’re doing and we’re through playing games with you. You aren’t going to be able to get around this. It’s too late, we know what you’re trying to do and we’re not going to let you do it. No one else will talk to you. We’re only doing this to help you.
That’s well into the territory of gratuitous all-purpose free-floating blame. I’d love to know where he was previously employed.
When this failed to reduce Winchell to sobbing contrition, he moved on to the inappropriate punishment phase, imposing a six-month freeze on her personal account, demanding that she write a humiliating and bizarrely unbusinesslike letter of apology, and telling her that she would have to ask permission to cancel her account. The only other company I know of that talks to its customers like that is Publish America, which uses a nasty grade of verbal abuse on its victims as part of its blow-off strategy.
It’s extremely difficult to believe that these and other representations he made reflect PayPal’s actual policies. You don’t have to qualify as a nonprofit to use a donor button. Charities and worthy causes are and have always been overlapping categories. PayPal is not in the business of certifying exactly who is and isn’t a legitimate recipient of aid; as long as it looks reasonably respectable, they’ll handle the transactions and take their cut. Thousands of online retail sites will send gifts to the recipient of your choice, and almost all of them take PayPal. Mystery gifts, grab bags, and unspecified odd lots get sold all the time. You don’t have to have a company’s permission to close out your account and end your dealings with them. Et cetera and so forth.
So is this contretemps actually the fault of one rogue employee? Nope. It’s still PayPal’s fault. As I said earlier, this guy is a known type. There are others like him, and other types you don’t want working in that kind of public contact position, and lots of mischief that can be done by inadequately supervised employees who have access to financial accounts. PayPal should be aware of all that, and have appropriate safeguards and monitoring in place. Clearly, they don’t.
The most recent word is that PayPal is backing down, and has apologized — not surprising, given that the internet fell on their head today. It doesn’t get them off the hook. Basically, what happened to April Winchell and Regretsy ought not be possible. If the guy she dealt with has been working at PayPal for a while, they should have noticed before now that he has serious problems. If he’s new to PayPal, they shouldn’t be letting him run loose to anything like this extent. And no matter what else is going on, an individual PayPal employee shouldn’t have the unchecked power to pull stunts like that with someone else’s finances, because it’s an open invitation to corruption and abuse.