Hackers for Charity account frozen by PayPal

by Steve Ragan - Jul 15 2009, 17:09

Update 2: Long has posted some information now that the account is back online.

Hackers for Charity account frozen by PayPal. (IMG:J.Anderson)

Update 1: 13:25 EST -- According to @tottenkoph on Twitter, "Got an email back from Keely Fox, she has informed me that PayPal has restored Johnny Long's account."After switching his WordPress blog to subscription management service Suma, Johnny Long inadvertently triggered a series of events culminating in the suspension of the Hackers for Charity (HFC) PayPal account. As a result, several thousand dollars in donations used to support Long's family and the HFC food program in Kenya, are sitting useless in a locked account. In a blog post this morning, Johnny Long explained the events that led to the freezing of the HFC account. It started when he switched subscription management software on HFC’s WordPress blog. He switched to using a subscription management plug-in called Suma. Suma manages how people access posts on the HFC blog, as those who are members and donate monthly, as well as those who donate one time at a set level, gain access to exclusive posts and information. The donations serve two functions in supporting the Long family while in Africa, but the bulk of them go directly to supporting a food program and other initiatives in Kenya.During the process of switching plug-ins, Long had to switch HFC’s PayPal account to a Business account, this is when “all hell broke loose,” he explained. “PayPal required a proof of non-profit status (we’re not a non-profit yet, no 501c3 paperwork from IRS) which we don’t have, (I selected the wrong box I guess) a printed bank statement (harder to get than you might realize, being overseas), which [became] a REAL problem because the account was in my name, not the business name and other information,” Long wrote. “Because I couldn’t provide some of the info (501c3 paper) and the other info (bank stuff) took a LONG time, PayPal restricted my account, meaning my subscription payments are bouncing, and I can’t transfer money out of my account… I had [$10,000 USD] in my personal PayPal account. That was my family’s support money as well as money for our food program in Kenya.”To resolve the problems with the account, Long called PayPal’s customer support, which costs about $0.30 USD a minute in toll charges. After reaching someone on the phone, he was then told to send an e-mail. “Emailing service is ridiculous, and a week goes by between responses,” Long exclaimed. “Last I got from them was that I couldn’t talk to them because I emailed from an address that wasn’t on the PayPal account. So I had to create another email account, and try again (a painful process),” he outlined.“Now they are telling me that the bank info I provided isn’t correct because the bank account isn’t in the business name. Now I have to switch bank accounts in PayPal…get another statement to them and hope they accept it. At that point they will probably deny me again because I haven’t sent them the 501c3 papers.”Much of the time-consuming process is due to waiting to hear from someone at PayPal -- the back and forth can certainly be an issue. Mostly, however, it is because of limited access to the Internet and phone because of Long's location in Africa. When he has Internet access, it is less than a dial-up connection. For this reason, most of his blog postings are images with handwritten notes in a journal.“I asked to switch to a for-profit account (even though we’re not) through the ‘PayPal resolution center,’ but have received no response. This would remove the requirement for the 501c3 paperwork, but I have no faith in this process because everything submitted to the resolution center must be in a graphic format (png, jpg, etc) and I was forced to take a screen cap of a text document explaining my case…,” Long wrote.The bottom line, according to Long, is that PayPal has frozen HFC’s assets. PayPal has documented processes for 501c3s, according to its help center documentation: “If you are collecting donations as a charity or nonprofit organization, you are required to authenticate the status of your account. You can inquire about approval by submitting contact information, business URL, and a brief business summary to compliance@paypal.com.” “As part of our authentication process, PayPal may later request that you provide proof of your tax-exempt status or registration under the applicable country-specific regulatory body or laws, and to conduct due diligence… However, all donation transactions are subject to review and must comply with all Acceptable Use Policies.”It would appear that somewhere during the process of moving things on his PayPal account, Long tripped something that could have registered as fraud, or violated the AUP. However, the issue isn’t that he might or might not have made a mistake. The issue for him is that the resolution process is slow and hindering. Donation payments are bouncing, he tried to call support, only to be told to use e-mail, and then e-mail support took several days at a time to respond.So far, we only have Long's side of the story. The Tech Herald has asked PayPal for comments and will update the story once it responds. We’ve asked how the account came to be suspended, and if it was due to fraud detection or something else? As well as the steps needed to be taken to resolve the issue, we also asked if PayPal would comment on the support issues experienced by Long up to this point, as well as if anyone who donated to HFC should be worried about their PayPal accounts being frozen.In a slight update to the story, Long has made contact with someone within PayPal, but so far things remain unresolved.Want regular updates from The Tech Herald? Follow us on Twitter.Interested in a more interactive TTH? Join our Facebook Group.

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JibbaJabberJul 15th, 2009 - 23:48:50

PayPal is eeeeeeevil.

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WhatCustomerService!Jul 16th, 2009 - 15:31:34

This is not insane, this is standard operating procedure for anything connected to eBay or PayPal. Situation Normal, All FU.

Both eBay and PayPal are notorious for their lack of comprehension skills. Any query will inevitably result in a reply totally unrelated to the subject of the question. Repeated submission of the original question is almost guaranteed to result in a different irrelevant reply each time.

To relieve the frustration eBay sellers used to 'play bait the bot' and post the entire correspondence on the forums.

The astounding essence of the problem is that these people hold the power to freeze all funds in a legitimate user's account for periods of up to 180 days. This can be extended indefinitely each time it is reviewed 'If we have reason to believe' Sec 10.2 of the user agreement.

PayPal, an essentially unregulated money transmitter, is prosecutor, judge, and jury in any dispute, which is decided without any input permitted from the defendant.

Cool beans huh?

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