It is very difficult for any company to manage its staff, reputation, social media, and so on. However, when you are as large as Paypal, it is extremely important to get it right. Or you risk the wrath of a worldwide community. As has happened in the last 24 hours.

Social media can be used as a force for good, as Twitter’s Stories of 2011 clearly shows.

However, there are times when it can all just seem to go wrong for business. This time it is Paypal, who have got entangled in a story rapidly going viral involving Regretsy, who took donations via a Paypal Donate button to buy gifts for under-privileged children for Christmas.

As you can see from the post below, someone at Customer Services in Paypal decided that the Donate button was inappropriate. At that point, everything began to unravel.

The results? It is too soon to tell but it could irreparably damage the brand that is Paypal for some users.

The Regretsy side of the tale. As yet, Paypal have failed to delete the ever-growing number of comments on the Facebook page, nor post an apology on Twitter (which you would think would be the first step in damage limitation and reputation management).

UPDATE: Paypal has issued a statement, apologised, and made a donation

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As you know, we have been trying to buy Christmas presents for kids in the Regretsy community.

We took many applications, vetted them carefully and set about creating a giant gift exchange program, where you could buy a gift for the over 200 children we’re helping.

We raised so much money that we found ourselves in a position of not just being able to send toys, but to send a monetary gift to the families as well. We hoped it might help them make their holiday dinners more special, or maybe pay a pressing bill.

PAYPAL SHUT IT DOWN

Apparently we made the mistake of using the “Donate” button, which Paypal is now claiming is only for nonprofit organizations to use. They froze the account, which also includes Zazzle money that we use to make emergency gifts. That money isn’t in issue, but what the hell! Might as well keep everything!

So last night, I decided to go about this a different way. Since these toys are already purchased, I decided to offer them up for sale on this site, just like any other retailer would. You could buy them according to what you wanted to spend, and we would send them on to the recipient of your gift, just like any other retailer.

PAYPAL SHUT IT DOWN

After a very long and jaw-dropping conversation with an incredibly condescending representative, they have decided that I must refund all the donations and purchases that have not been processed. If you don’t get a refund, it’s because we got your money before they got smart and kept us from helping children at Christmas, which is really the best move any corporation can make.

Here are a few highlights from our conversation:

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.

So to recap:

$ They allowed me to use a donate button, and got a portion of the donations
$ Then made me return the donations, and kept a portion of the fees on the donations
$ They allowed me to use a Buy Now button to sell gifts individually, and got a portion of those sales
$ Then made me return the sales, and kept a portion of the fees on the sales
$ They processed the toy purchases, and made fees on that

They have made a fortune for not doing anything but making me manually return thousands of $2 sales and contributions.

I have been able to guarantee purchase and shipment of the toys, so that part is happening, as are the letters from Santa (most have already been delivered).

However, I am very sorry to say that at this point, I am not able to make a monetary gift to the families. They have frozen everything that was not already spent or donated, and I have no more funds to make a gift of that size.

MERRY CHRISTMAS

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About the author:

A practising internet marketing consultant since 1996, Lindsey Annison helps companies improve their website marketing, online PR and information architecture. Lindsey is also a qualified adult education lecturer and author. As co-founder of the Access to Broadband Campaign, she has been instrumental in the provision of high-speed internet access to rural areas in the UK. Lindsey is also a past winner of Silicon.com's Outstanding Contribution to UK Technology