Recently I had a problem with PayPal, and although I got myself through it, I thought I’d share my experience as a warning for those who use PayPal to receive donations from readers.
In May, I found myself with a letter in my mailbox from PayPal telling me that my account was locked. I could no longer receive or send money, make withdrawls or do anything with my account when I logged into it. I had nearly $1000.00 in it so this sent me into a panic. I have had a PayPal account locked on me before because I did a nsfw comic, and I knew they were very unforgiving when they decided to lock accounts. But depression comix was okay, I thought, why would they lock me out again?
The problem was donations. For a long time, I had used the donation button on the site, using it like a tip jar. There are thousands of other sites that do likewise, and many WordPress donation plugins advertise themselves as such. You just plug it in and go, right? If PayPal had a problem with it, they wouldn’t let you do it, right?
The first thing I saw when I logged on was a formal request to send documentation: identification like a driver’s license, a recent bank statement, and a utility bill showing my name and address. They also wanted me to document and explain recent donations. Furthermore, they wanted documentation verifying me as an NPO. Now this last piece was specifically a stunner, as obviously I am not a non profit organization. I thought for sure I was going to be locked out of my account forever.
I called PayPal and they swiftly admonished me for accepting donations when I wasn’t an NPO. They told me to get the documentation together and send it. I had a problem with my bank (I chose the paperless account and wasn’t receiving bank statements so that took a couple weeks to sort out), but soon I had all the documentation ready, and I made another call.
Once again I had to explain that I was not an NPO. Although the person on the other end was pleasant, I was made to log into the depression comix site and remove all instances of the words “donation” and “donate” from the site while she was on the phone. When she was satisfied that I was no longer stating on the site I was accepting money as donations, she removed the limitations of my account and warned me that if I reverted the edits, I would be locked out again.
This was a huge pain and it took the better part of three weeks to get resolved. That’s three weeks of not being able to use my PayPal account or knowing whether or not I would have to say goodbye to $1000.00 and my PayPal account.
If you use PayPal and you advertise you are accepting donations and you are not a NPO, you are at risk for an account limitation.
I’m not saying this to be threatening. I just didn’t hear they were strict until it happened to me. I think I got flagged when a week earlier, someone made a donation and then rescinded it saying it was made without their authorization. Even after I refunded the money immediately when I received the dispute the next day I got the limitation.
So, using the word “donations” on sites accepting PayPal as a method means they expect you to be a NPO.
I hope this story saves someone out there some aggravation. You do not want a PayPal employee to walk you through your site making changes on it.
As for “donations” I don’t accept them anymore, I accept contributions made through the Send Money option. If you would like to make a contribution, my gracious thanks in advance, but we can’t call them donations any more.