Some of our users might know that we have been accepting donations to support us in developing TortoiseSVN for a few years now. We used PayPal to achieve this, as do many other open source projects and even some closed source but free-of-cost projects.

Even the biggest hoster of open source projects, sourceforge.net, has a special feature built into their project pages where every project can activate such "donate" buttons, and that too is handled by PayPal.

Now imagine my surprise when I got an email from PayPal last Wednesday with the subject "PayPal appeal denied". Because I never had to appeal anything with my PayPal account. Reading through that email I discovered that my account was blocked because they've decided that I'm not allowed to receive donations.

This had me puzzled. Because I know that if a big company like Geeknet Inc., the owner of sourceforge.net offers to their users to use PayPal to receive donations, something had to be wrong with PayPals decision to block my account. So I asked for clarification and of course how I could get all the money I have in my PayPal account back. All I got was some lame default answer.

Not ready to give up, I tried to explain to them that they had to had made a mistake here, giving them several examples of other projects and of course sourceforge.net. I wrote several emails, adding more and more arguments. The first answer was again a lame default pre-written crap. Then finally I got an email back from them which showed that they actually have read at least one of my emails. But that email didn't really answer my questions. Basically they admit that I didn't do anything wrong but that they won't admit their mistake and that I'm still screwed: they will still hold my money hostage for 180 days (If I ever get it back - something I'm not sure about anymore).

If they're not allowed to let people use their accounts to receive such donations because of some law, then they must put that in their TOS. But there's nothing there (I checked). And if the law changed, they still must tell that to their users before they start closing accounts (which didn't happen). Because how would I know of a change in law in Singapore? I live in Switzerland!

All the emails I got from PayPal again in a list:

• first email
• second email
• third email
• last email

I always assumed that if you don't do anything wrong or try to cheat that you'll be fine (1). PayPal now proves me wrong.

I never used my PayPal account for something other than to receive donations for TortoiseSVN. The only time I used it to pay for something was when I bought a license for Visual Assist. But I consider that a fair use of the donations since I use that license to write open source projects, like TortoiseSVN or other various tools.

It's astonishing to me how a company is allowed to do business that way. Imagine your car shop decides not to do business with you anymore. No problem there, you just go to another shop. But then the shop owner tells you that they keep your car for half a year first because that's their policy.
Basically, that's what PayPal does now with my money.

I'm sure I can find a way to cover the costs of our servers another way, and until I get my money back from PayPal I might have to pay for it myself.

Finally: A sincere warning to all the developers out there (2) who try to get a little bit of money for their hard work: withdraw all the money from your PayPal accounts now, before it's too late. As you can see, PayPal can screw you any time they want.

And if you read this and know about other projects which use PayPal to accept donations, please warn them before they have their accounts blocked too.

If you want to discuss about this, please join the thread on our mailing list.

Update

PayPal has restored my account. I received an email from them asking me to promise that I would never use the account to receive donations anymore. Well, since I don't want to wait 180 days to get my money back and even then I wouldn't be able to use the account anymore, I promised to not do that anymore.

So I got my account back, but still can't use it to donations to TortoiseSVN. I'm now waiting for the lawyers at SourceForge to find out what's going on.

Update 2

It took a while, but a lawyer from Geeknet was finally able to get a real answer from PayPal. Even he as a lawyer had troubles getting in contact with a real person there!

Bottom line: they finally admitted that they closed my account accidentally and that accepting donations for open source projects is not against their TOS.

Here's what they wrote back to the lawyer:

To follow up on this, I confirmed that the PayPal restriction has been removed and the user can accept donations through PayPal on the website below. Donations for certain categories are restricted, but this is not one of them. The account has been flagged as approved internally to hopefully avoid any future issues.

We can now again accept donations to cover our server costs via PayPal. Let's hope that the PayPal employees take a course learning their own TOS so this never happens again.

(1) with the exception of course if you're the victim of an accident or a crime.
(2) the projects linked here were the first ones to show up in this search.