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PayPal in flap over freezing a 'charity' account

PayPal restores a donation account and apologizes after taking a beating online.

Here's yet another reminder that bad corporate behavior just won't go unnoticed nowadays.

PayPal this morning issued an apology of sorts after it froze an account designed to let people donate toys to underprivileged children. The impetus: a torrent of online wrath. PayPal also re-activated the account.

At issue is a dispute with a site called Regretsy, a popular blog that bashes handmade goods, what it calls "crafting failures." Regretsy had organized a gift exchange to let people buy toys for kids in need.

The site says it raised so much money that it was able to send money as well as gifts to needy families. But PayPal, according to Regretsy, didn't like the site's use of the "donate" button.

The details of PayPal's rules on the donate button aren't even what's interesting. These sorts of disputes pop up all the time. Sometimes they're resolved behind the scenes. But often they're not.

Regretsy, being a blog, naturally, took the fight to its blog, with a post simply titled, "F**k You, PayPal." Then, in a subsequent post, Regresty's Helen Killer posted transcriptions of what she says was a conversation with a PayPal representative.

Here's a snippet from the post, which resulted in more than 1,200 PayPal-bashing comments:

Regretsy slammed PayPal in a blog post.

This morning, PayPal issued a statement on its corporate blog and took to its Facebook page to apologize, saying: "We have released funds back to Regretsy and will be making a donation. We are very sorry this occurred."

It was a swift effort, for sure, but the damage had been done. In short order, there were hundreds of comments on the Facebook post, many of them ruthless:

Perhaps, after mending their ways, some hearts at PayPal--like the Grinch--grew three times today.