/cdn.vox-cdn.com/uploads/chorus_asset/file/23985514/acastro_STK091_03.jpg "Etsy sellers claim that a fraud protection initiative is negatively impacting their businesses")
D., a carpenter and Etsy seller of several years, recently made a sale of custom furniture for around $150. However, this sale brought frustration as the earnings would be held by Etsy for weeks, leaving D. with only a small amount of money to cover expenses. Etsy has put D.’s account under restrictive settings since late June, holding 75 percent of earnings from orders in a “payment reserve” for a period of two weeks to 45 days. After deducting fees and expenses, D. is left with around $13. This has caused a great deal of stress and anxiety for D. and many other sellers who are facing similar restrictions on their accounts.
The issue of payment reserves on Etsy accounts has become increasingly prevalent, with numerous sellers reporting similar experiences. While Etsy claims that the reserves are meant to protect buyers and ensure that sellers can fulfill orders in a timely manner, sellers like D. argue that reserves are being applied to shops in good standing without any clear explanation. Sellers have struggled to get answers from Etsy regarding why their money is being held. This has created financial difficulties for many sellers who rely on their Etsy earnings to cover their bills and expenses.
The situation becomes even more challenging for sellers who make custom products that require more time to produce and ship. The delayed release of funds can disrupt their cash flow and make it difficult to fund their businesses and personal expenses. Some sellers have had to dip into their savings or rely on credit to cover their costs. It is particularly frustrating for these sellers, as they typically use the funds from a sale to purchase the materials needed to fulfill that order. The reserve system has made it harder for these sellers to maintain their businesses and has forced them to reduce restocks and decline custom work.
While Etsy claims that reserves are affecting less than 2 percent of shops on the platform, the impact on those affected can be significant. For sellers like Y., who work with precious materials like gold, the delayed payments have made it difficult to manage their business expenses. The time difference between purchasing materials and receiving the funds has increased, making it harder to keep inventory and fulfill orders. This has led to frustration for both sellers and customers who are eagerly waiting for restocks of popular items.
While the reserve system may have been designed to protect against scammers, it has created a situation that is detrimental to legitimate sellers. The complexity of the system, with the 75 percent reserve minimum that sellers must meet and subsequent deductions from future sales, has made it challenging for sellers to cover their operating costs. Some sellers have had to resort to taking personal loans to make ends meet.
The frustration among sellers is compounded by the perception that Etsy has moved away from its original purpose of supporting artisans and small sellers. The relaxed rules around handmade items, increased fees, and additional requirements like tracked shipping and customer service have made it harder for sellers to make a sustainable income on the platform. Meeting the requirements of the Star Seller program, which supposedly exempts sellers from reserves, is not feasible for many Etsy shops.
Overall, the payment reserves system on Etsy has created financial difficulties and stress for many legitimate sellers. The lack of transparency and clarity around the reserves, as well as the challenges in meeting the requirements to avoid reserves, have fueled frustration within the seller community.