Did PayPal’s apology solve its Grinch problem?

After a dust-up with Regretsy over whether a gift exchange for needy children met its policy guidelines, the online payments service is trying to avoid looking hard-hearted.

Paypal had a tough day Tuesday. It was such a bad day that Twitter users were announcing their switches to competitors and the company’s Facebook wall was loaded with comments about closed accounts.

The outpouring of rage was over the freezing of Regretsy’s account when the popular blog, according to PayPal, incorrectly used the online payment service’s “donate” button for a holiday gift exchange for about 200 needy children. The idea that the company was keeping toys out of the hands of kids—all the while collecting fees—infuriated many.

After several hours of online tumult, PayPal issued an apology, stating it would release Regretsy’s funds. But it perhaps wasn’t enough to keep the company from appearing Grinch-like, PR experts say.

Grading the apology

PayPal’s written apology was merely OK, says Stephanie Fusco, a PR professional who blogged about the Regretsy incident.

“It seemed more like something that had to be done rather than a thoughtful apology,” she says. “Due to the nature of the issue and the number of complaints, it’s pretty obvious that they were largely motivated due to online backlash.”

The statement’s focus is all wrong, too, Fusco asserts. Rather than address the customer service problems Regretsy faced, it doubled down on policy.

“Instead of promising it would improve the policies and their customer service representative training to be more through, PayPal stood by their evidently confusing guidelines,” she says.

One Regretsy fan went to great lengths to point out just how unclear PayPal’s policies were.

Jonathan Hemus, director of Insignia Communications, says the apology was a necessity—the fallout would have been much worse without it—but that PayPal didn’t do a great job of regaining lost ground, largely because of what he calls a “contolling and somewhat arrogant” tone.

Take the title of the PayPal blog post, for instance: “Regretsy issue resolution.”

“Ultimately Regretsy, its followers, the blogosphere, and Paypal’s customers will really decide whether or not the issue is resolved, not PayPal itself,” Hemus says. “They’re operating in the court of public opinion, which means they don’t get to decide the verdict.”

Because Regretsy’s campaign—sending holiday gifts to needy children—is the sort of thing about which people can get quite emotional, PayPal shouldn’t have opted for such an “unremittingly corporate” tone, he contends.

“The best communicators can sense the public mood and understand the sentiment and tone of what needs to be said, whatever the facts, logic, or legalities may specify,” Hemus says. “PayPal clearly lacks this sixth sense.”

Norman Birnbach of Birnbach Communications says PayPal was right to point out that it has to take steps to avoid fraud, and he said it’s good the company’s statement came with a picture of its communications director looking serious, given that on other posts, the picture is of him smiling.

However, it seems to Birnbach that the attorneys won when it comes to the wording of the message. “It’s more like a statement than an apology, because the statement never seems to apologize for the company’s actions. It merely tries to explain the situation,” he says.


It also didn’t help that PayPal’s apology blog post came about 13 hours after the incident started making the rounds on social media.

“It came halfway through the workday, when the issue had been on everyone’s radar all morning,” says Fusco. “The timing would have been better, although not perfect, if the company had at least posted a statement first thing in the morning that they were looking into the matter and would be providing an update.”

However, Birnbach says it is to PayPal’s credit that the company was able to respond within 24 hours.

What now?

There isn’t much PayPal can do now, except just let things blow over, says Fusco. “PayPal needs to ride it out and ensure they’re open and honest with their customers throughout the process,” she says. “This is especially important since Regretsy has shown they are going to continue to post about the story.”

One thing the company can do, she suggests, is disclose all the financial information about the gift drive—including the fees it took.

“To clean up their image, I’d suggest ensuring that every single cent is donated to the cause,” Fusco says. “Why not waive the processing fees entirely? The continued backlash towards the situation, even post-apology, confirms that PayPal has a lot of work to do to win back users’ trust.”

Birnbach agrees that refunding the fees would be a good step. Likewise, it could adjust its guidelines, “showing that it had, in fact, learned the lesson from this situation.” The company could also start accepting donations on Regretsy’s behalf, he suggests.


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