Beware PayPal's Donation button

[fenris-lorsrai.livejournal.com]

I've seen some artists using Paypal's Donate button when they do a donation drive for a specific need or for variable rate commissions as donations. This may not be a good idea...

This is blowing up on internet right now, but PayPal came down on website Regretsy for using the "wrong" button to collect donations to provide holidays presents to the children of crafters in need. Been picked up by Consumerist

Basic issue: payPal lets you use the "donate" button to collect money without vetting you are a charity... but then gets to decide if it really is a "worthy cause" or not and may shut down, freeze, or lock account... including funds NOT from the donation button.

post on Regretsy at initial limiting
Update after Paypal locked ALL funds (including ones not collected through the donate button) for six months

something awful had a similar experience with donations for Katrina

You probably won't have this issue with small donations... but large ones may catch their attention and put you in a similar situation.

EDIT TO ADD: bunch of open source projects that had donations frozen

EDIT #2 Screenshots and breakdown of PayPal's TOS and AUP, plus PayPal rep encouraging use of the donate button by non-charities

EDIT #3 (geez I am the edit machine)
Paypal issues press release saying they HAD unlocked the money... but issued statement before actually doing so or actually talking to Regretsy Paypal's not very apologetic apology (there were also repeated reports that they were deleting comments left on the blog. those are obviously hard to prove one way or the other)
and then another update!
Paypal does...something. maybe. we think
I honestly can't figure out, if they ONLY want the button used by vetted charities, why they offer it to non-vetted individuals at all! There is a difference between personal and business account features, this should be stupidly easy programming to only allow use of the donate button to vetted charities.

Comments

[amarafox.livejournal.com]

This happened to me about a month ago with an ebay sale. I've been on Ebay since the beginning, I have all positive feedback and I have never had funds held, and then they went and held my funds. What the hell, Paypal?