Now it can be told: Paypal ruined online donation drives for Ondoy victims

Grabbed from wordpressboy.com
Grabbed from wordpressboy.com

[UPDATE: Paypal has apologized.]

Yesterday, TXTPower turned over to the Philippine National Red Cross a fourth check (P493,047.20) containing donations sent in by folks worldwide who answered TXTPower’s call for donations for victims of typhoon Ondoy in the Philippines.

We did this project with one simple cause in mind: Provide people across the world a way to safely and securely make a donation for typhoon victims in our country. And we are glad and heartened by the trust given by nearly 1,000 donors from 37 countries who pitched in a total of P1,678,437.63 in donations already in the hands of the Red Cross.

But unknown to many,  Paypal intervened last week, froze the account we used for accepting donations, and ruined our fundraising campaign as well as that of another group, PhilippineAid.com. In fact, the following interventions are the key reasons why TXTPower formally stopped its campaign late last week despite the continuing pleas for relief aid.

Typhoon Paypal rains on TXTPower’s fundraising efforts for Ondoy victims

Paypal’s Account Review Department said in an email on Sept. 30 that:

As part of our security measures, we regularly screen activity in the PayPal system. We recently noticed an issue with your account: PayPal requires accounts within the charity / non-profit category to provide us with some additional information regarding their organization. Your account was identified as falling within this classification upon a recent review. If we do not receive a response, we may have to place limitations on the ability to access your account.

PayPal requires accounts within the charity / non-profit category to provide us with some additional information regarding their organization. Your account was identified as falling within this classification upon a recent review. If we do not receive a response, we may have to place limitations on the ability to access your account.

[I was not surprised. Mike Villar of PhilippineAid.com called me up the day before and told me that Paypal has frozen their account for the same reason. Mike immediately filed an appeal and even went to call Paypal’s customer service to drive home our common compelling point, which is the urgent need for funds for typhoon victims. Paypal turned down their appeal. PhilippineAid.com thereafter redirected its ChipIn traffic to TXTPower’s Paypal donation widget and link.]

In reply to their “request for information”, I  submitted to Paypal an explanation and supporting documents (from the Securities and Exchange Commission and the Bureau of Internal Revenue) that prove: that I am president of TXTPower; that TXTPower is a non-profit duly-registered with the government; that the ongoing TXTPower drive is a very public and transparent exercise; and that the Philippine National Red Cross knows about this fundraising drive. I also included links to media articles which mentioned or featured our campaign.

We thought that was it.

Paypal acts like typhoon Pepeng

But Paypal denied the appeal. Moreover, instead of saying that the explanation and documents I submitted were insufficient, Paypal changed its tune and used an insurmountable and grossly unfair justification.

In an email (Oct. 1) , Paypal’s Compliance Department said:

Due to legal and regulatory constraints, PayPal Private Limited is no longer able to process payments for Charities, Political Party/Organization Donations, Non-Profit Organizations (NPOs), Religious Institutions, etc in those countries under its jurisdiction.

Upon receipt, I emailed another appeal. Paypal’s reply:

[…] sorry that at this time, as you are unable to complete the appeals process for your PayPal account(s), then access to the account(s) will remain limited. In accordance with our User Agreement, the funds in your PayPal account balance will be held for 180 days from the date the limitation was originally placed on your account. The balance is held to cover any disputes that may be filed against the account. And your balance can be handled in one of two ways:

1. Your remaining account balance can be used to provide refunds to your buyers (if applicable).

OR

2. Your remaining account balance will be held in your PayPal account for 180 days from the date your account was limited. After 180 days, you will be notified via email with information on how to receive your remaining funds.

Paypal was, by this time, acting like a typhoon worse than Pepeng. First, they asked for documents (we gave them all they need). Then, they said it was impossible for them to service Charities and Non-Profits. This time around, they insist that we have not passed the evaluation process — and asked that we refund donors or wait for six months before we get the money. Elsewhere in the Philippines and across the region, more and more people cry for relief aid and here we are being harassed by Paypal.

I emailed another appeal and asked if it was possible for us to just make a donation to the Red Cross’ official Paypal account which they set up two days before. I told them the can shut down my account permanently as long as we get the money immediately to the Red Cross.

The reply from Paypal? Another rejection. In an email (Oct. 2), Paypal said that:

Per PayPal policy, you could only choose to refund to the buyer of each payment.

By that time, I already gave up sending appeal to Paypal’s Compliance Department.

After some time spent on intense research to get contact information of Paypal’s top executives, I found the name and email of Paypal’s head for Global Communications and several assistants. I promptly emailed them, asking for their help regarding what happened to our account and wondered to them why this harassment was being done despite satisfying their “requests for information”.

I also sounded off TXTPower’s friends in the mobile and online activist communities abroad, discreetly telling them what happened and asking for their help to impress upon Paypal the huge public-relations disaster that is waiting to blow on their faces — the world would know how they are harassing Paypal users in Philippines amid the humanitarian crisis.

One-time exception

On Oct. 6 (imagine the time wasted by Paypal’s obnoxious behavior), Paypal emailed to explain that “your desire to take donations through PayPal for your worthy charitable cause is one case that causes issues for PayPal because PayPal Pte Ltd, the Singaporean company you contracted with for your PayPal account, is unable to process donation transactions”.

Paypal said that:

Our regulatory approval in Singapore only permits PayPal Pte Ltd. to process payments for goods and services. Under Singapore law, which governs your relationship with PayPal, PayPal Pte is restricted to [be] used for processing donations. This policy and approach applies to all customers in all countries which contract online with PayPal Pte Ltd. It is not specific to you, your organization, or your country.

As a consolation, Paypal said that “in light of the dire situation with the typhoon victims in the Philippines, our Legal and Compliance Department has reviewed your appeal and agreed to provide a one time exception to lift your account restriction if you are able to provide us with a written assurance that the collected funds you have accumulated in your PayPal account will go to the Philippine National Red Cross for the stated purpose”.

Within minutes from firing off an email giving them this assurance, and another email that contained a scanned copy of an authorization from Red Cross secretary-general Gwendolyn Pang, Paypal informed me in an email (Oct. 6) that they are unfreezing my account.

Mike of PhilippineAid.com, to whom I shared the name and email of Paypal’s Global Communications chief, also had their account restored and the donations they received quickly withdrawn from Paypal.

Paypal denies service to a relief agency

Yesterday (Oct. 9), Paypal rejected an application for a business account made by the Citizens Disaster Response Center, a Quezon City-based relief agency registered with the Securities and Exchange Commission, and licensed and accredited by DSWD to implement relief, rehabilitation, preparedness and mitigation programs.

Founded in 1984, CDRC is a founding member and chair of the Global Forum of NGOs for Disaster Reduction (GFNDR). It is the pioneer in “community-based disaster management” in the Philippines. It has served at least three million people through its programs since 1984. CDRC is SEC-registered as a non-profit, non-stock social development agency.

An important issue to the Philippines and the region

Take note that Paypal Pte in Singapore oversees company operations across the Asia Pacific. Paypal’s acts against TXTPower and PhilippineAid.com, and its conflicting and incredible statements are terrible and horrible news to charities, non-profits and individual initiatives who are now officially denied the use of Paypal.

This is unfair to us Filipinos and other living in our region, considering that Paypal in other regions actually highlight its use for donations and fundraising. Check out Paypal’s  Non-Profit Resources in the US, for example.

Paypal should review this situation, considering the fact that the Asia Pacific is one big market, an area prone to disasters, a region with many charities and non-profits as well. They would lose business and, more importantly, they would lose the chance to make their payment system work for noble causes.

This Paypal policy is itself another disaster for our region that has recently been battered, shaken and drenched by typhoons and earthquakes. If Paypal is truly interested, the company should perhaps consider setting up a sub-office outside of Singapore to be able to provide donation and fundraising options for Asia Pacific. It could also ask the Singaporean government to expand its license in the name of the region’s charities and non-profits we hope Paypal also wishes to serve.

Better yet, this is an opening where Paypal competitors should come in. Xoom.com, Amazon Payments, Google Checkout, Ikobo and other alternatives.

What we can do now is to discuss this issue in the blogosphere and the online community, as well as  with charities and non-profits affected by this unfair and inhumane policy.

57 thoughts on “Now it can be told: Paypal ruined online donation drives for Ondoy victims

  1. Grabe naman sila. I thought all the while that Paypal supported the use of its services by non-profit and charity organizations. It was good that there was a temporary resolution, but I agree that there should be further discussion on this so that issues like this don’t happen again.

  2. this is one of those instances where technology becomes more of a hassle than a means to make things easier. i am pretty sure that this will be resolved soon. considering how big paypal is, i assume a lot of heads are figuring how to improve the process. i hope it becomes better in the future. my two cents; they are simply looking from a security perspective, like all other financial institutions.

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