PayPal Freezes Out Katrina Aid

From Wired News.

On the morning of Sept. 3, Rich Kyanka set up a PayPal account to raise money for Hurricane Katrina victims, with the intention of donating the money to the American Red Cross.

Kyanka runs the popular Something Awful web community, which is based in New Orleans, and donations came in quickly. Within nine hours, Something Awful readers had donated $27,695.41. Kyanka donated an additional $3,000 from his own pocket

"While we are a very cynical and bitter and adult humorous site, when actual tragedies strike, we try to band together and try to help out," the 29-year-old said.

But just as Kyanka prepared to send the money to the Red Cross, the account was locked by PayPal, which launched an investigation into possible fraud.

Kyanka said he thinks PayPal became suspicious because too much money came in too quickly. PayPal spokeswoman Amanda Pires would not discuss details of the case, citing "privacy concerns."

This is not the only post-Katrina fund-raising account PayPal has locked. Members of the forums at dealmac also say a charity account was frozen.

"My account was red-flagged by PayPal for keywords in the hurricane disaster-relief fund," wrote fund-raiser Danny La on the dealmac forums. "On the phone they said that unless I was a nonprofit group then I could not collect (money for charity)."

In an attempt to unlock the Something Awful account, Kyanka faxed copies of bank statements, credit card statements and his driver's license. However, in an e-mail, PayPal told him he would have to wait "between three and five business days" while the investigation continued, Kyanka said.

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