Etsy to Change Certain Practices Following Report by BBC

Etsy issued a special statement on Tuesday outlining a number of changes to how it holds seller funds in reserve, a practice that helps it manage risk. The announcement came after a BBC article on Monday reported on how limited access to their funds created financial strain for Etsy sellers and indicated the UK government was interested in the matter.

In the coming days, Etsy said it would make the following changes:

• Making reserves more dynamic. For the vast majority of sellers, we are substantially decreasing the percentage of funds we currently hold in reserve.
• Improving communications to sellers who are newly placed in reserves to help them understand our logic and how to get their funds released earlier.
• Making adjustments for issues that are beyond sellers’ control. We are aware that there are limited options for low-cost, tracked shipping services in the UK and other markets. We will be adjusting our criteria and making accommodations so that sellers can still have their funds released quickly.

Etsy’s payments lead Chirag Patel said in Tuesday’s announcement that the company used payment reserves “on a very limited basis to keep our marketplace safe.”

“We introduced payment account reserves in 2021, and to date it’s been successful in helping us to deter fraudulent activity and ensure reliable shopping experiences,” Patel said. “However, as we’ve expanded and iterated on the program to further protect our marketplace, we recognize it may have led to disruptions in how some sellers manage their day-to-day operations.”

Patel said Etsy hoped the updates would make it easier for sellers to continue running their businesses even if a reserve is placed on their account, and said Etsy was committed to being more transparent.

Earlier today we wrote about a notice Etsy sent to sellers on Monday informing them about a cash advance lending service even as many were buzzing about the BBC article that reported Etsy’s reserve policy was causing some sellers to suffer financial hardship.

You can find Chirag Patel’s post on the Etsy forums.

Ina Steiner

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She’s a widely cited authority on marketplace selling and is author of “Turn eBay Data Into Dollars” (McGraw-Hill 2006). Her blog was featured in the book, “Blogging Heroes” (Wiley 2008). She is a member of the Online News Association (Sep 2005 – present) and Investigative Reporters and Editors (Mar 2006 – present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.