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Sat Oct 16 2021 16:05:28

Etsy Begins Holding Seller Funds More Aggressively

By: Ina Steiner

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A seller reported that Etsy is holding 75% of their funds in reserve, leaving them struggling to pay their bills. Reserves are normal for new sellers or for those who have received a warning for a policy violation, but a rumor is circulating that Etsy is testing a new, more aggressive practice of holding funds of well-established sellers.

Anecdotal reports popped up on Reddit and Etsy discussion boards, and we've heard from several sellers who say they were impacted.

The timing, coming in early October, may indicate Etsy is trying to reduce risk ahead of the busy holiday-shopping period. But that's when cash flow issues can hit sellers particularly hard as they incur upfront product-sourcing and shipping expenses before receiving payments they use to pay their bills.

One seller forwarded to EcommerceBytes the email they received from Etsy on October 5th informing them of a reserve on their payment account:

Hey there (shop name redacted),
We're writing to let you know that we've placed a reserve on your payment account. That means that 75% of the funds you receive from each order will be held in your account for up to 45 days from the date of the sale - just in case there are any issues with your orders.

Want your funds earlier? When you add tracking information for an order, the funds in your reserve are made available when the package shows that it's in transit.

Reserves are placed on accounts based on different risk factors, such as, but not limited to, if you recently made your first sale on Etsy or have received a communication from our Trust & Safety team for a policy violation. Payment account reserves are temporary. This reserve will be removed from your account in 90 days, unless there are additional policy infractions with your account. We'll let you know when the reserve is removed from your account.

Payment account reserves protect your business by helping to keep your account from going into the negative if you have unexpected charges or refunds. If you give your customer a refund or their money is refunded by their credit card company after a dispute, your reserve has you covered. The money in reserve is yours. If you don't have any disputes or refunds during the reserve period, it will be available to deposit to your bank account (minus any applicable seller fees, which will be deducted from your reserve funds) after the reserve period.

View your payment account

Here are a few tips to help you stay on top of your orders and keep delighting customers:

- Ship your orders on time and adjust your processing times if you need more time for future orders.

- Provide tracking to your buyers whenever possible.

- Don't mark items as shipped before they're dropped off with your carrier.

- Respond to any messages from customers quickly - within 24 hours if you can.

Get more details about payment account reserves in our Etsy Payments Policy and in Etsy's Help Center.
Learn more

The email included a link to Etsy's help page, "What is a Payment Account Reserve?"

Another reader who had a reserve placed on their shop told EcommerceBytes they received no explanation for the sudden change. "As a Star Seller who has been selling on Etsy since 2006, with nearly 1,100 sales, it's rather perplexing," the seller said. "If you know why Etsy has rolled out this questionable practice (other than prolonging their access to my money), please let us know."

And another EcommerceBytes reader, "Unhappy in Ottawa, Canada," wrote: "I'm one of the longtime sellers impacted by this. Two weeks ago, I received a notice out of the blue, that for the next 3 months, Etsy would be holding 75% of my payout. WTH? I've been selling since 2013 and have 3 successful shops. I sell more than $100,000 of goods. No answer to my queries from Etsy. I don't know what they are trying to achieve but in this case, it's one less store. My inventory is for sale and I'm out."

The issue came to our attention this week when a reader forwarded a link to a Reddit thread started on October 8th about a more aggressive Reserve policy where the original poster wrote in part, "I've heard more and more rumblings that established sellers with no history of violations or poor service are now starting to have reserves put up on their store as part of an Etsy test. One guy in another group I'm in says Etsy are now trialing this out with more established stores basically to see what would happen- I.e. do we continue to trade, do we shut shop, go on holiday mode, basically would we make them LESS money. They seemed to think payment reserves for all are on the horizon."

And on October 12th, a seller wrote publicly about the reserve Etsy placed on their shop, posting directly on the Etsy discussion boards.

The seller, based in London, UK, said she had been on Etsy for over 2 years and had made £80.000 in sales in 2020. "I'm not a new seller, I earn money for Etsy all year round. I work hard to find new clients and make my shop bigger. This is how Etsy thanks me!"

"Last week, they transfer me £14.99!!!! For 15 open orders - the shipping cost is worth over £100 !!!! How can I keep my business on track with this kind of policy," she asked. "How can I pay salaries? How can I pay my suppliers? Any podcast maybe?"

A visit to her shop on Thursday shows Etsy displaying the following praise for the seller: "Buyers are raving! This shop got multiple 5-star reviews in the past 7 days."

But that same day, she said she received the following communication from an Etsy Financial Specialist:
 
"Kindly know that we are unable to remove a reserve once it has been placed on a shop. For most sellers, the reserve will be removed within 90 days and you’ll be notified that it has been removed. However, we will monitor the shop during this time and if there are concerns with order fulfillment, the reserve could be extended up to 180 days. We will send you an email to let you know once the reserve is removed from your shop."

If Etsy has informed you it will begin holding a portion of your funds in reserve, please forward the email to us and leave a comment below.



Comments (27) | Permalink

Readers Comments

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

by: SmallBizSally This user has validated their user name.

Sun Oct 17 00:15:35 2021

I know personally people affected by this policy. Doing this to sellers before the Christmas season- heartbreaking.  

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

by: postbuster This user has validated their user name.

Sun Oct 17 09:04:15 2021

I would advise all sellers not to tolerate this kind of treatment.
Loyalty should not be handled in this way.

This is typical for corporate persons, selfish and greedy.
They offer nothing in trade, they would rather damage the economy even further, to pocket money that should have been dispersed for more purchases and cycling of money to help ALL businesses.
They are the a-holes who speed past traffic to get to the same red light first. (i.e. same result, but more reckless endangerment.)

They are the reason that bills cannot get paid on time, employees refuse to come to work, and why inflation affects more of the working class.
They don't 'make' money fast enough, so they hold money that does not belong to them.

The worst part is how it is not surprising anymore how these imposters try to get money when they have no marketing skills, no creativity, and no talent to run business.
They are exploiting the suffering of a pandemic to get rich.
They have plenty of revenue, and make excuses of being desperate, and hold all sellers accountable for ''violations'' committed by the few.  FOR MORE MONEY.

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

by: postbuster This user has validated their user name.

Sun Oct 17 09:09:19 2021

''- Respond to any messages from customers quickly - within 24 hours if you can.''
WTF is this supposed to mean?
This is a punishable offense?
It's ^^this^^ kind of statement that proves they intend to sanction everyone just to gorge themselves on money that DOES NOT BELONG TO THEM!!

Similar to the crooked cab driver who short changes the customer, and the companies who believe that ''hidden fees'' is how to make money.

STEALING money is not the same as MAKING money!!

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

by: 1 Angry Artist This user has validated their user name.

Sun Oct 17 18:22:05 2021

This is really the end of the line if they are going to be outright stealing our money.  I am a very small seller (luckily I guess) and I haven't heard about them doing it to the low volume shops, but I can't imagine what these people are going to do in the face of HIGHWAY ROBBERY.

I think that if the Etsy thugs are stealing 75% of your money, it's time to contact your state's attorney general and file a complaint.   Seriously.

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

This user has validated their user name. by: Rexford

Sun Oct 17 20:08:59 2021

This likely has less to do with risk and more to do with the huge return on interest that they can make holding sellers' funds.   No amount of money is enough for them.  Money is like a drug to them.  I think that both Etsy and eBay have executives who do nothing but devise and implement new schemes to make them more and more money.  

It kind of reminds me of the treatment of those carriage horses that give tours in historic cities.  They'll  starve the horses and whip the horses and work the horses until the horses just fall prostrate on the pavement.  Think of sellers as being the horses.

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

by: BurglePork This user has validated their user name.

Mon Oct 18 00:30:42 2021

This is such classic Etsy. Roll out a punitive new policy (that doesn't really make any sense in the first place) right before the holidays, and nail some big, successful sellers with it, who have zero appearance of having done anything wrong ever. When will this terrible company finally fail? I feel like I've watched Etsy do sh!t like this for a decade and a half and haven't seen them pay any real price for it, ever. It's baffling.  

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

by: Bubbles This user has validated their user name.

Mon Oct 18 00:49:51 2021

If they even think about it with our account we will be out of here faster than greased lightening. Appalling behaviour from Etsy so they can earn from OUR money.

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

by: Paul W This user has validated their user name.

Mon Oct 18 03:00:07 2021

''When you add tracking information for an order, the funds in your reserve are made available when the package shows that it's in transit.''

Seems to me this makes the whole thing a nothingburger.

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

by: Chicago48 This user has validated their user name.

Mon Oct 18 04:18:50 2021

What's the alternative for these sellers?  They are hand crafted goods and need to display items online.  What is their alternative?

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

by: CenTex This user has validated their user name.

Mon Oct 18 06:21:42 2021

I just want to add I followed the thread on Etsy regarding the seller from the UK having funds held and later in the thread the seller stated they had shipped a couple orders a day past the target ship date so this was the trigger Etsy used to place the hold.  As a seller I watch my ship dates carefully on Etsy and anywhere else I sell because that's my job.  

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

by: cvsharkey This user has validated their user name.

Mon Oct 18 06:53:32 2021

Money held in escrow is usually allotted interest earned. Are they willing to get into this?

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

by: cvsharkey This user has validated their user name.

Mon Oct 18 06:53:33 2021

Money held in escrow is usually allotted interest earned. Are they willing to get into this?

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

by: Ophelia1 This user has validated their user name.

Mon Oct 18 10:02:49 2021

Regardless of what it says in Etsy's terms of Use and Service.....
Is this even legal?  

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

by: Stone Cutter This user has validated their user name.

Mon Oct 18 11:58:41 2021

Yet, Etsy has made it clear that they want tracking attached to shipments AND they want sellers to ship "on time". Competition for Etsy are with other e-tailors who promote "fast shipping" and always with tracking. It's up to sellers to keep up-to-date with Etsy's latest initiatives.  

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

by: Gumball This user has validated their user name.

Mon Oct 18 12:00:16 2021

I know it is too late this year to dump Etsy, but start today working on getting another site or two online to sell at, get off Etsy altogether.  I don;t know how most sellers affected can pay shipping costs for 45 days out of pocket with no funds coming in. And then when they do come in, you will have to use half of those fees to pay more shipping costs. While the rest of your funds are being held.
Also every seller out there needs to realize that if Etsy sellers accept this, and sellers don't leave the site, then every venue out there will holding seller's funds citing one reason or another for weeks and even months. Think about how we will have to pay shipping costs from Octobert thru December to satisfy venue demands for Holiday sales while we wait for the venue to release our money. Keeping track of all the fees and dings they take while hold that money will be a nightmare.  

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

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

Mon Oct 18 12:13:58 2021

I'm too Good for Etsy.

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

by: Snapped This user has validated their user name.

Mon Oct 18 12:48:36 2021

“ 'When you add tracking information for an order, the funds in your reserve are made available when the package shows that it's in transit.''

Seems to me this makes the whole thing a nothingburger.”

None the less tangible, and laced with asphyxiating nuance, thus:

However ‘temporary’, liquidating this conjured clot thus instructed requires a shipment type that provides tracking (and a subsequent timely carrier scan, that has to be ‘recognized’ by interface processed receipt bot and then commanded to unlock the vaults at the whim of their timed for max benefit processing).  

Many shops that didn’t before need tracking may now be compelled to do so, at least in the short term (hmmmm, Q4 venue revenue increase injection on ship fees, imagine that).  Many crafters, customizing, who can’t ship an item in the pipe, already reliant on supply chain links lately stretched to snapping, suddenly face dribbling taps.  Many light manufacturers too.  

Not only that, while funds previously available remain quarantined, sellers who can still have to open wide their pandemicly stressed purse, pop to and ship it out already. ‘Decreed’ by surprise. During the ramp-up to the big glut.  

And in the case of those already etched in electrons unto the very system under which the golden curtain has now descended, who have established a history of impeccable servitude yet no less mutually beneficial and significant profit, this sanitized-for-your-protection revenue rake at their expense is revoltingly insulting. To deny appeal with indifference and claim of lacking empowerment over processing, doubly so.

Is it legal?  Moot, until voters (that would be buyers and sellers) compel elected representatives to enact and enforce laws that feed the appetite (and pay the retainers) for enforcing due process in eCommerce, in business itself.  That’s always been a challenge though because corporations are not ‘persons’.  No heart or soul.  Primitive brain stem.  

And if that bite on the old “nothingburger” bun is too much to swallow, one can always vote with that very same dollar, or currency of choice, and withhold it from their unethically sanctimonious reach, as best able.  That last bit is hardest to digest of course.  

Otherwise, message seems to be, no matter how distasteful, eat it.  It’s good for you.

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

by: Stone Cutter This user has validated their user name.

Mon Oct 18 13:45:28 2021

And once again, business models matter. Sellers with shops that sell inexpensive products can no longer afford the cost of shipping & tracking. This has been the MATH I've noticed now for many years that sellers refused to notice.

Otherwise, sellers with higher priced products will have no problem with this change as they cannot afford to comply. And I do NOT believe that Etsy is randomly holding funds without reason. As a buyer, I too want my products tomorrow and with adequate tracking...without that, Etsy will die as an e-commerce site...and we all lose.  

Perminate Link for Etsy Begins Holding Seller Funds More Aggressively   Etsy Begins Holding Seller Funds More Aggressively

by: an American in France This user has validated their user name.

Mon Oct 18 15:15:11 2021

The majority of my Etsy sales are digital, so their BS about placing a reserve to ensure I upload shipping info is a scam. I’ve earned Star Seller status & have an excellent record for 15 years. Why are they actively trying to push successful sellers away from their platform? Thank goodness I can pay my bills even though Etsy is holding my money hostage, but it’s making me seriously consider other sales platforms. Alienating one’s revenue source is a poor business model.

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by: Ophelia1 This user has validated their user name.

Mon Oct 18 15:50:48 2021

Considering the numerous significant problems that continue to plague Etsy, time and effort would be better spent improving the platform rather than constantly finding  new ways to choke the life out of its sellers. Etsy has forgotten who is the hand that feeds them.
Until Etsy improves its own services, Etsy does not have the moral authority to tell sellers how to run their own shops.
This latest scam about witholding funds is nothing more than their effort to inflate their numbers so they look good to investors, earn additional interest on money that sits in their bank, money that belongs to the sellers.
I agree with ''an American in France'', time to seriously consider other selling platforms.

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