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Fri Feb 15 2019 15:39:31

Etsy Money-Grab Glitch Causes Havoc for Sellers

By: Ina Steiner

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Etsy took money from sellers' credit cards or bank accounts that they don't owe the company, some sellers are reporting this afternoon. In some cases, the amount is in the hundreds and even thousands of dollars. It appears to be a glitch, but questions remain about how it happened and how many sellers were impacted.

Etsy acknowledged the issue when a seller posted on the Bugs forum at 12:22 pm ET that Etsy had drafted $395 out of her checking account when she didn't owe any fees.

At 1:18 pm, an Etsy moderator wrote: "There's a team working to correct into this as I type. Once I've got more information, I'll be updating this thread. I'll be pinning this thread to the top of Bugs and directing other threads about this situation into here for easy updating. Thanks!"

In the meantime, some sellers reported Etsy had charged their credit cards, such as a seller who said Etsy charged their card for $344.46 despite having held a positive balance. "Why doesn't Etsy have a email support or phone number to get answers," the seller asked.

One panicked seller said Etsy took funds she didn't owe the company out of her checking account. "Etsy took over $$$$ out of our checking acct too!! WTH?? My husband is on the phone with them trying to stop that!"

"Charged over $12,000 to my credit card! Card has now been de-activated due to suspicion of fraud! What is going on," another seller asked.

On another thread where sellers discussed the issue, some sellers reported a supposed fix from Etsy that seemed to further complicate matters for some sellers. "They charged my CC, yet they want to refund me through my Etsy Payment Account. I don't even have access to that money until it is finally deposited into my bank account (Monday is also a federal holiday). For the time being, this is a pending charge on my CC, and they SHOULD be refunding or stopping these transactions before even have the chance to go through, instead of refunding us through our payment accounts."

Another seller said, "Same thing happened to me today. I called, and instead of reversing the incorrect charge back to the credit card, they sent the money to my bank account. Really? So, now I am responsible for paying a 1317.00 bill on credit card, as well as any interest from 3 days until money clears on Monday. They would have had to pay a bank service charge for the reversal, oh well. They goofed big time, now it is my responsibility turned off autobilling, so that will not happen again. My question is how it happened in the first place. Scary. With their new policy, I never have a bill, so whoa, this is a big bad thing."

One seller advised his colleagues to call their banks. In his case, his bank opened an investigation, but won't charge him interest, nor will they make the withdrawal appear as an over-the-limit purchase until the issue is sorted out.

The Presidents Day holiday is adding further stress for sellers worried about their liquidity over the long weekend.

We've got an inquiry in to Etsy.

Update 2/15/19: Etsy referred us to its update on the thread that is pinned to the top of the bugs board:

"We're aware of a bill payment error affecting a small group of sellers which resulted in some cards being incorrectly charged. We don't expect this error to impact additional sellers going forward.

"For affected sellers, we're very sorry for the trouble or concern this may have caused and we are currently working to make things right. We'll update the impacted sellers directly as we have more information. Thank you."

Update 2/15/19: Some sellers who were impacted said they received emails from Etsy. One email informed a seller that Etsy refunded the charge to her card on file - "and it should appear on your statement shortly." It seems sellers should expect their Etsy payment account balances to go back down accordingly. 

Sellers continue to express concern about the fallout, including fees and overdraft charges (in the case of checking accounts), as well as possible tax ramifications.

Update 2/16/19: Etsy apologized to sellers and acknowledged another problem that arose as it tried to fix the initial error: "related to fixing the root problem, some sellers saw their scheduled deposit of funds returned to Etsy on Friday, February 15, and those deposits will now be sent on Tuesday, February 19."

Etsy also said it would "refund any undue fees associated with this incorrect charge and change in deposit schedule" - see more in EcommerceBytes Newsflash.

Update 2/23/19: See the following updates published in Newsflash:

"An Update on the Etsy Billing Disaster" (February 22 Newsflash)

"Etsy Updates Sellers on Last Week's Billing Glitch" (February 23 Newsflash)

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This user has validated their user name. by: Life During Wartime

Mon Feb 18 11:40:01 2019

Rover:  I was perma-muted in 2013.  Of the 3 strikes against me, only 1 of them vaguely violated the rules.  When I pointed out to the dim bulb Etsy staffer that the reason given for the 3rd and final violation had nothing to do with my post quoted in her email, she got back to me and agreed.  BUT...since my posting tone tended toward the sarcastic generally I was perma-muted anyway!  In other words, I was on a staff "hit list" and they were looking for anything I wrote they could stretch into a violation of the rules.  

Etsy spends $$$ paying staff to act like primary school recess monitors instead of on analysts and auditors to keep an eye on the real business of an online venue.  And it shows.

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by: Flying Childers This user has validated their user name.

Mon Feb 18 11:40:35 2019

Sammy Cat- Excellent comments and all too true.  

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by: SammyCat This user has validated their user name.

Mon Feb 18 12:12:14 2019

And ... let us not forget the cash grab on shipping and that Etsy has said, out loud and in writing that people offering free shipping will show higher in search.

This too was an outrageous cash grab, and to punish all those outside of the US that can not comply because of the higher costs of int'l shipping, higher priced or larger, heavier items and the need to ensure there is insurance and tracking on anything that leaves their country.

Its one financial grab after another from their customers.

Yes, WE are their customers and not the people that come to buy from our shops.  

They would NOT exist if it were not for the shops that have put their faith in a stable and fair Etsy.  

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by: zenbreeze This user has validated their user name.

Mon Feb 18 13:24:19 2019

Wow.  I had already decided to go off etsy and concentrate on my website but is there a way for me to ''downgrade'' my account and get my financial details off there?  I'd like to still be able to buy and leave the door open but I don't feel too safe there.

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This user has validated their user name. by: Bidonmine

Mon Feb 18 14:52:32 2019

I just closed my Etsy account due to this glitch (I wrote the reason on the closing page, as if anyone at Etsy would ever read it)... I am fortunate that the charges did not happen to my account but i no longer want to risk anything with Etsy. This is not the first time they have had a major glitch that has cost many sellers. I have never seen such a poorly run company (they make Ebay look like a gold standard).

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This user has validated their user name. by: The End

Wed Feb 20 02:15:46 2019

WARNING !
8.3% -  is the REAL take rate at Etsy.
NOT the 3.X% they'd like you to believe.
This includes Etsy's take, "payments" take, relisting fee, and the "Shipping" take, oh and add the State Tax if they charge one.
When planning our "out the door" total we actually receive, this REAL amount we pay is crucial.
So, in order to keep up with the greed at several levels, and still make it worth spending our time making things to sell on Etsy, it is important to be up front and honest about THE REAL COST to sell and item on Etsy.
It is 8.3% - .

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by: jlm2000 This user has validated their user name.

Thu Feb 21 20:33:01 2019

This could be a sign of a ponzi scheme.  These are exactly the kind of weird red flags that end up popping up in ponzi schemes.  If anyone works at Etsy and finds that there are only one or two people that control all the financial statements they should be suspicious.

The idea behind this would have been to "accidentally" charge customer's accounts so they could pay company bills that *must* be paid immediately.   This "error" gave Etsy at least the entire holiday weekend before they had to pay the customers back.  Then when Etsy refunded the customers, Etsy just happened to stop money transfers that were supposed to go to different customers.  Could be a sign they didn't have enough money to refund everyone without stopping those transfers.

Sounds paranoid maybe, but ponzi schemes are often VERY hard to detect.  That's because people can move money around in so many different ways that no one knows anything is wrong until it's already over.

Honestly though if it was a ponzi scheme and they were desperate enough to pull off something like this, they would have to be pretty close to running out of money.  So if it is a ponzi scheme, they'll probably only last a few more months unless they bring in more investors.

I'm not a conspiracy theory guy, I just like reading a lot about financial frauds.  Everyone always ignores the first red flags.  If Etsy lasts another six months without it turning out to be a ponzi scheme or without getting more investors I'll be satisfied that it probably was just an error.

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by: jlm2000 This user has validated their user name.

Thu Feb 21 20:40:55 2019

Just to follow up to my above comment, the nature of the ponzi scheme would be that Etsy could be spending pending customer money as if it were theirs.  At first it would seem fine to them, because the sales from the next day would pay when the previous day's customers want to transfer.  However over time you'd quickly get in a hole where customers want to transfer more than you had left in reserves.  Etsy would end up taking out loans so they don't get behind in dispursements to customers.  Then they're really screwed, because now they'd end up using customer's pending money to pay back loan payments as well.  Eventually they could have to resort to something as crazy as "borrowing" money by charging a bunch of customers right before a 3 day weekend and claiming it was an error.

Again not a conspiracy theory guy, this is just the kind of stuff that happens in ponzi schemes, though that would have to be a really desperate move.

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by: Silver Ice King This user has validated their user name.

Fri Feb 22 02:10:59 2019

I am still positive that Etsy is have cash flow problems as this is the second major issue they have had in recent months plus they changed the timing of when payments were due without notice to sellers suddenly.  These are the desperate moves of  company that needs money to pay its bills and i will bet that based on the timing of this glitch, Etsy needed to cover payroll on the 15th and this was the only way they could manage to do it.  Then they were hoping that sales over the weekend and the holiday would provide enough funds to at least return the "borrowed" money and then they would worry about how to get their deposits covered later.  This appears to be a company right on the verge of having to file Chapter 11 bankruptcy and it will be very interesting how they announce the results from last quarter and answer the questions they should be getting on this issue also.

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by: Whatever This user has validated their user name.

Fri Feb 22 11:39:55 2019

Any seller that gets ripped off deserves it - know how to deal with this before it happens. Some have forgotten or never knew to open a 2nd "clawback" account. For those that don't know.  I myself belong to a credit union - they don't charge me for additional checking accounts. I can have 10 if I want.

1 - pay your seller fees with a credit card.  As someone above mentioned they will protect you.

2 - perhaps you don't have a credit card.  Open a 2nd checking account. NEVER give any institution your actually living acct number.  So you open a 2nd checking - this is the account you give to etsy.  When they pay you for your sales it dumps into that account - it will be pending for 1 day in most cases. Transfer that amount immediately to your regular checking account thereafter.  If there is a chargeback coming your way from a disgruntled buyer etsy will have to wait for more money to pile up to refund the buyer.

ok so it's a legitimate refund - just transfer that amount needed back into your etsy related checking account ie your personal account

for me that account virtually sits at a -0- balance at all times - soon as there's money in it I move it.

Alot of people have forgotten about clawback accounts. it used to be the norm.  If your banking with a bank that charges you fee for anything - get out now. Commercial banking is in the decline - don't get caught up in their extinction. And don't let your life be ruined by others stealing your money - bouncing your house or car payment - having no money to feed the kids. Clawback.

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by: bobsy This user has validated their user name.

Fri Feb 22 21:04:50 2019

Any seller that gets ripped off deserves it?
Wow. You blame the victim here?
You don't understand how Etsy works or this recent chaos. Sellers do pay fees with a credit card but that didn't stop Etsy from taking thousands of dollars from some peoples cards.

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by: rideaway This user has validated their user name.

Sat Feb 23 05:00:40 2019

Etsy does not care anymore. For nnon-US sellers we are STILL overcharged on every sale. They promised us they would solve the 5% issue early of 2019 (I heard through others not through Etsy, not surprising as they dont seem to care about their sellers anymore since the new CEO)

Honestly im very pissed and angry. We need to do our tax returns for 2019, but the numbers are all wrong????? So now what????
Etsy promises blablabla.

The new CEO implement all new buggy features (to proof himself??) where they can make money from (pattern still does not work properly and is buggy, issues written to easy about for at least 10 times and they dont care). But issues like the 5% issue seem to have no urgency at all. At least the minimum they could do is update sellers in timely manner. But also no. Offcourse not, they took the money and make sure we dont owe them anything. But the other way around, horrible standards.

The new fashion at Etsy Support is, divert the problem always when a sellers writes.  

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by: IanB This user has validated their user name.

Sun Feb 24 11:32:05 2019

I don't know if Etsy have cash flow problems, but the continued financial mismanagement is extremely worrying. I've been there since 2005 and the forums are now full of complaints about Etsy to a degree that was unheard of even three years ago. I'm probably going to close my shops soon, because to be honest I've reached a point where I simply have no trust in them.

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by: Lowe40 This user has validated their user name.

Tue Feb 26 01:39:03 2019

I’ve sold on Etsy since 2007.
I’ve heard all kinds of “conspiracy” theory’s since the orginal owners were chased away.
But having sold online since 1999, I knew it was just, for lack of a better term, “growing pains”. With growth comes change.
However since the CEO prior to Silverman, & Silverman himself, there’s something, off, at Etsy.....

Poor mgmt? Financial issues? Employees that don’t care (cuz they lost a lot of cushy perks when Silverman took over, & he got rid of a fair amt of them w/in his 1st 3 mo)? Poor programmers, coders, ITs, etc? Employees doing what they choose when they choose? Search that sucks? Crappy pmt processors?
And all the other myriad issues Etsy has......ppl w/free shipping get search priorities, which, for an INTERNATIONAL online selling community, means international sellers get screwed, companies (or sellers) selling items not Etsy legal, but don’t get shut down, because, well, they bring in big bucks.

I never believed in some of these, some things I questioned (afterall, I started selling on eBay, so......)

Is the end near for Etsy?
Are they trying to get bought out? (Making numbers look better than they are?)

Something’s off somewhere. You don’t have “glitches” like this as regularly as Etsy does w/o there being a problem somewhere.
The CEO before Silverman was no prize, for sure. But he came from an IT background & didn’t even like saying Etsy was a “selling” platform, he described it as a tech company building “tools” for sellers.
At least Silverman has online selling background, coming from eBay, & that had the option of being really good, or really bad.
The longer he’s here, it’s looking more like really bad. Kinda makes me wonder if it’s intentional, so eBay could take over Etsy & Silverman could go back to working for them, but in this “satellite” branch.........

I know for my business there, I get between 3-6 sales, then they “shut off”. But, AS SOON as those 3-6 pkgs showing as being scanned in USPS suddenly my sales go back on again. Like literally within an hr of them being scanned suddenly I get 1-2 sales.
I thought it was just coincidence but I’ve been following it closely for the last 6 months & it’s held true.
And selling online since 1999, I know that’s not how it works......unless you are somehow manipulating something, truely random “search” based on what you sell doesn’t close off sales after 3-6, then POOF voila, w/i an hr of scanning, suddenly turn back on again.

Seems like the longer Etsy is around, it’s not getting better, it’s getting worse. Kinda the wrong way for a business to go, if they want to STAY in business.  

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by: Freeeeeeeee This user has validated their user name.

Sat Mar 9 05:26:57 2019

In my opinion, and it is just opinion, this company has some major behind the scenes issues.  Political and practical.  

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