Research and reports
Small business owners and craft makers are threatening to boycott Etsy for withholding their money.
The online marketplace has a reserve system to manage risks like customer refunds, but a BBC report reveals some sellers have had 75 per cent of their takings frozen for 45 days.
Many sellers are sole traders and not being able to access their funds may be harming their ability to trade and keep their business afloat.
New sellers or those with a sudden increase in orders could see a reserve placed on their account.
Other reasons include:
Etsy’s payments policy says reserve funds will be used “to address potential financial risk such as refunds, charge-backs, claims, or seller fees and charges” when the seller doesn’t have enough funds available to cover this.
But as buyers can be unwilling to pay for a tracked courier service, sellers are left without any way to remove the reserve on their account. This means, instead of waiting until the next working day for funds after a sale, many shops are having to wait 45 days.
The Etsy payment account reserve system can place a percentage of sellers’ funds on hold for a period of time. This effectively stops business owners accessing their money as they’re unable to transfer it into a bank account.
Two types of reserve
Sellers find out they are placed on reserve by email, but there’s no advance warning for when this is going to happen.
Frustrated Etsy sellers are taking to social media to plan a strike on the platform.
The Etsy Reserve Strike group on Facebook has over 1,000 members, although it’s not clear how many will take action.
Meanwhile, a petition is calling for protection from Etsy’s 75 per cent payment reserve process for small businesses.
This comes a little over a year after sellers boycotted the platform in response to an increase in transaction fees.
Etsy advises sellers to follow these steps to avoid having a reserve put on your account:
Have you been affected by Etsy withholding money from your shop? Let us know your experience in the comments below.
Catriona Smith is a content and marketing professional with 12 years’ experience across the financial services, higher education, and insurance sectors. She’s also a trained NCTJ Gold Standard journalist. As a Senior Copywriter at Simply Business, Catriona has in-depth knowledge of small business concerns and specialises in tax, marketing, and business operations. Catriona lives in the seaside city of Brighton where she’s also a freelance yoga teacher.
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