Online sellers say some of their PayPal payments from customers are being diverted, leaving them without their funds and leaving their customers impatiently waiting for their orders to be fulfilled. The problem appears to be isolated to Etsy, which acknowledged the problem and is being blamed for the snafu. But it raises the question of whether this could happen to other marketplace sellers as well.
Over a week ago a seller reported the issue on this Etsy thread
. "I received an email saying an order was placed yesterday through PayPal. I've got the Etsy receipt number but PayPal never received the transaction. I've contacted PayPal and they need the customer to contact them. Would this be a problem between Etsy and PayPal communication? I've counted the buyer regarding this problem, but thought I would ask here in case it was a bug issue."
Other sellers reported the same issue, including this seller who wrote, "I have a similar issue, and PayPal told my customer that her payment went directly to Etsy rather than to my account. We've both talked to PayPal now but are still waiting to hear back from Etsy. And it was marked Paid here on Etsy and in her PayPal Account, but the money just never made it over to mine."
The next day, a moderator posted a response to that seller. "We've received your email. I've gone ahead and escalated your issue to our team to investigate."
But other sellers wanted to know, "Why would a customer's PayPal payment go to Etsy's account first? If it went to the wrong PayPal account, that's a PayPal problem, assuming all the addresses are right."
Another opined, "Etsy should not have access to our dealings with PayPal, nor should PP be handing our money to Etsy. What the heck?!"
Yesterday, Etsy posted another response. "My name is Joe and I work on the Payments team here at Etsy. We understand the frustration you all are having with this issue, and be assured that we are working hard to resolve it. At this time, we're working directly with PayPal's engineering team to determine the root cause of the issue and how to address it. On our side, it looks as if we're sending the correct information over, however, as you all are reporting, a small number of payments seem to be going to the wrong place. We'll continue to push this until the issue is fixed, and we’ll be sure to update you all as we learn more."
Sellers said their buyers are also getting impatient. "Can Etsy PLEASE give my customer their money back, so I can send her a pay pal invoice OR deposit the money into my account? My customer is VERY frustrated and I would like to be able to send her order out to her. It's been 9 days, and still no answer on this. We all deserve to know what is going on."
How is it possible that a payment made from a customer to a merchant ends up in a marketplace's pocket? Even if it's something on Etsy's end as many sellers suspect, it would appear it's a problem for PayPal as well.
Last October, sellers reported a similar issue
, but it affected sellers not only on Etsy, but on eBay, Bonanza, and even people who transferred their money from one account to another. We've got questions in to Etsy and PayPal this morning.
Update: An Etsy spokesperson said the company was aware of the issue and was working to resolve it. "We hope to have more information later today. In the meantime, you can find out more in Joe Blossom's post in the forums."