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PayPal Blocks Hurricane Relief Funds (http://www.betanews.com/article/PayPal_Blocks_Hurricane_Relief_Funds/1125880826)
By Nate Mook, BetaNews
September 4, 2005, 8:40 PM

It's no secret that the widespread destruction of Hurricane Katrina was exacerbated by delayed relief efforts, but the latest victims of bureaucracy are those individuals simply trying to help out. Humor site Something Awful raised almost $28,000 in less than 9 hours - right up until PayPal froze the funds.

Something Awful's dedicated community may call themselves "goons," but they have historically been quick to respond when needed. The site previously raised $22,000 to fund armor plating for soldiers in Iraq. And the disaster unfolding in New Orleans and the rest of the Gulf coast was no exception.

With its main Web servers located in downtown New Orleans and offline due to flooding, Something Awful founder Rich Kyanka asked visitors to donate to the Red Cross from a temporary page explaining the situation.

"Some people are emailing me, asking if they can donate to SA to help with our server move and downtime and temporary hosting and stuff. Don't worry about us, we'll be fine," Kyanka wrote. "If you really want to make a difference, donate to the SA Red Cross Relief Fund link above. They need it more than we do."

Unable to take credit card payments directly due to his site being down, Kyanka set up a PayPal account specifically to handle the effort. Donations poured in at a rate of almost $3,900 per hour - an astounding number from any perspective.

That is, until PayPal shut down Something Awful's donation account late Saturday evening. Because PayPal's customer support was closed for the night, Kyanka was unable to discover why $27,695.41 in Red Cross relief funds were locked. PayPal's automated system explained that it had received "more than one report of suspicious behavior from your buyers."

In the interim, Something Awful directed visitors to donate directly to the Red Cross. Kyanka said he originally setup Something Awful's own fund so he could send free merchandise such as hats and t-shirts to those who donated.

Explaining the situation on Something Awful's temporary Web site, Kyanka exploded: "It's not me you're hurting; it's the thousands of goddamn people with no homes, no money, and no hope fleeing a burning, flooded wasteland they used to call "home." I wasn't going to take a single cent of the donations, unlike PayPal, who decides that when people send money to help victims survive a national disaster, their company should still make over 2.35% of everything sent in."

Kyanka reached a PayPal customer support agent Sunday morning and was asked to fax in a driver's license, bank records, credit card records, and a written request to unlock the account. He was told it generally takes 3 to 5 business days to process the documents.

Another PayPal representative called Kyanka Sunday afternoon, offering to help resolve the problem. However, she also delivered some bad news: PayPal was unable to directly donate to the Red Cross. Due to prior agreements, the United Way is PayPal's relief organization of choice.

After initially agreeing to the charity swap, members of the Something Awful community questioned the United Way's record. And with no word of when the donations would be freed, Kyanka contacted PayPal and "asked them to refund everybody's money."

"All I tried to do was raise money and personally reward people for donating in a time of need, and it turned into a smoldering, twisted, burning car wreck along the highway. I'm beyond apologetic this did not work out the way I planned, but the pure hassle PayPal has given me trying to raise money just isn't worth it, especially when it could take over a week for the money to be unfrozen," Kyanka wrote in a final update.

"Please donate using the Red Cross link up top. I can't send you guys any free stuff, but I promise I'll sit here in my basement with the lights off, drinking a beer by myself and thinking of you."

I hope no one here has donated money through PayPal expecting it to go to the Red Cross.