In an unbelievable chapter in PayPal's saga of poor customer service and policies, BetaNews is reporting that humor site SomethingAwful collected over $29,000 for Katrina's victims in less than 9 hours - until PayPal froze the funds. Since their credit card processing had been down due to the hurricane, SomethingAwful founder Rich Kyanka asked visitors to donate to the Red Cross from a temporary page explaining the situation.

Kyanka reached a PayPal customer support agent Sunday morning and was asked to fax in a driver's license, bank records, credit card records, and a written request to unlock the account. He was told it generally takes 3 to 5 business days to process the documents.

Another PayPal representative called Kyanka Sunday afternoon, offering to help resolve the problem. However, she also delivered some bad news: PayPal was unable to directly donate to the Red Cross. Due to prior agreements, the United Way is PayPal's relief organization of choice.[Read Full Article at GeekCoffee]