Is it ever OK that a payment provider acts as a censor by shutting down anyone’s ability to accept or make payments and freezing their funds? Of course it isn’t.
UPDATE: According to a tweet PayPal succumbed to public pressure and freed their account. “Free at Last: Thanks to your tweets & emails, PayPal has freed the Diaspora* community’s donations! More info soon…” Great news!
“PayPal mysteriously and arbitrarily decided to freeze everyone’s donations,” as they wrote in their blog. And it’s not petty cash either, the organization had just raised $45,000 in a fundraising campaign a few days earlier. Now this money is locked away for up to 180 days.
Even though we’ve complied with every PayPal request, including providing them with our certificate of incorporation, they still won’t give us an explanation for any of their moves. And it wasn’t buyer’s remorse: From the thousands of donations we received, we had only one complaint and refunded that person’s money immediately. PayPal just sent us an email saying “appeal denied,” where they announced that they would lock up the Diaspora* community’s donations for 180 days. Yes, you heard that right. PayPal gets to earn interest on all of our donations for 6 months, while we have to wait for PayPal to come up with a reason to justify their decision.
It looks like another case where PayPal’s decision was triggered by one of their many rules regarding unusual spikes in payments received, negative buyer feedback (clearly not the case) etc. Even though technically it’s not censorship in reality freezing someone’s access to their funds means that their freedom to act is severely limited.
PayPal’s 6 months freeze policy is unreasonable and unacceptable in this day and age. The company is notorious for freezing accounts of both small and big customers. Simon Read has a good article on that: Is PayPal right to freeze customer’s accounts?
Diaspora* is 100% volunteer-run and a non-commercial organization that launched the first version of their social network about a year ago. They aim to offer an alternative to Facebook and Google+ by building a decentralized system that makes a point of not collecting excessive data on their user and their behavior.
Other’s on Diaspora*:
TheNextWeb: Diaspora: PayPal blocked our accounts and is preventing donations
Launch: PayPal freezes Diaspora* account, disrupts fundraising efforts
The New York Times: Four nerds and a cry to arms against Facebook