Be Careful about PayPal Donations....

I had a friend recently who had some money frozen by Paypal- he occasionally sells items on Ebay and one of his buyers refuted the charges over 30 days after (after giving positive feedback no less!). It wasn't a lot (<$200), but the very fact that PayPal not only froze his PayPal account but also dipped into his checking account remains very disturbing.

It took several unanswered emails and 30+minute phone calls, and to date, the problem still isn't resolved! In fact, a short search on the Internet uncovers a literal treasure trove of horror stories about using PayPal to collect money. It sure seems safe to use it to buy things, but when you collect money (for items or even donations), you put yourself at a lot of risk.

PayPal is not a bank- when you collect money, it goes into a PayPal account which is neither federally regulated nor insured. In fact, it's not even your money. PayPal can decide to do whatever they want with your money at any time. In addition, if you do have problems, customer service- at least according to my friend- is abysmal. One easy way to check is try and calling support at http://www.paypal.com/ - go ahead try it- they make it nearly impossible to contact a live human being (there's voice recognition software that you have to wade through first).

Here's a short list of some websites... while some of them are more or less trying to steer customers to their payment solution, the sheer number of horror stories leads me to believe that my friend's experience is very common.

http://paypalproblems.wordpress.com/
http://www.paypalwarning.com/
http://digg.com/security/PayPal_hit_by_payment_problems
http://pcworld.about.com/magazine/2007p030id101525.htm
http://www.reason.com/news/show/33114.html ****

**** This last one is quite interesting because it shows how a blogger raising money had his account frozen because he simply included a link about terrorism that was recognized as 'hateful' by PayPal.


Bottom line- I would never recommend PayPal to any non profit organization. Though we do offer our own service, called WebLink, with it's own real Merchant Account, I would encourage readers to use something else, even our competitors' products, before they use PayPal.