Why does PayPal keep diving into controversy?

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PayPal's executives likely expected the company's $3 billion buying spree of companies like Hyperwallet and iZettle to dominate its media coverage this month. But a single careless letter has stolen the narrative.

As the story of PayPal threatening legal action against the deceased debtor Lindsay Durdle makes its rounds, it calls into question the company's priorities (as well as its heart). Over the years, PayPal has made several PR blunders that demonstrate a lack of human insight into how it will be perceived by customers.

In this case, it took a public shaming for PayPal to apologize for the letter demanding payment from a woman who died from cancer. While the company declined to state why it sent the letter, according to The New York Times, the deceased's husband “said a representative for the company told him by phone that the letter possibly stemmed from a software glitch, a poor letter template or a human mistake.”

In a statement provided to a PaymentsSource, PayPal added: "We have also urgently reviewed the company’s internal processes to ensure this does not happen again.”

To be clear, this PR black eye is nowhere near the scope of other recent scandals such as Wells Fargo's practice of opening millions of fake bank accounts or Starbucks calling the police on two black men who asked to use the bathroom at a Philadelphia store.

But for some reason, certain companies are more prone to this type of controversy. For PayPal, the question is: Has its image improved or deteriorated since Dan Schulman took over as CEO in September 2014, or when the company spun off from eBay in 2015?

In June 2015 — a month before PayPal finalized its split from eBay — it updated the user agreements for its 165 million customers to have them automatically “opt in” for autodialed prerecorded calls and text messages even if they had never given the company permission. It was only after the FCC objected that the company backed down from its robocall policy.

Then there’s the fiasco about the PayPal Giving Fund, where the company collects donations on behalf of charities. PayPal has faced lawsuits from donors claiming their funds never reached those charities. PayPal's defense is that charities must register with the site in order to receive the funds — but why collect funds in the first place if there is no guarantee that they will reach their intended cause?

A quick internet search reveals other stories such as the company withholding funds for Nottingham girl with Spinal Muscular Atrophy (SMARD1) using a GoFundMe account to go on a Disney trip to it freezing the account of a national Canadian media organization trying to enter an awards competition for a news story about a Syrian refugee family.

While many of these stories can be traced to potential policy violations, possible fraud or being caught up in automated risk reviews, they are ultimately the responsibility of humans. And how the humans handle the follow-up sets apart companies who end up dealing with this type of controversy on a regular basis.

PayPal has a publicly available Code of Business Conduct & Ethics for everyone to read. On Page nine the last sentence in the section about “Making Ethical Decisions” asks the reader: Would you feel comfortable reading about your action if it is reported in the media?

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