Etsy accused of 'destroying' sellers by withholding money owed for up to 90 days

31 July 2023 , 20:52

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Etsy is facing sellers' revolt

Online marketplace Etsy is facing a growing revolt from sellers who are furious that it is withholding payments they are due from buyers.

The platform, which specialises in selling arts and crafts, has a controversial policy of putting a “reserve” on some sellers, meaning that it withholds 75% of money due to them for up to 90 days. Etsy says that it needs to keep money back in case of complaints from buyers.

But sellers point out that the site withholds payments even when they have been trading for years without problems. Many say that the policy leaves them without the funds to buy the new stock, threatening to shut down their small businesses. They also claim reserves are slapped on their accounts with no reason given apart from a generic list of possible causes.

Etsy puts a 'reserve' on some sellers in case of complaints from buyers (stock image) (Getty Images/Tetra images RF)

Now many sellers have taken to Facebook to discuss ways of ditching the site and moving to other online sales platforms after many complained to the Mirror. One seller in the group, jacket maker Niamh McCarthy, wrote: “My account has been on reserve for two months now, Etsy are currently holding £5,000 of mine. Things are getting really tough - I have two employees and don’t think my business will survive another month.”

Others have contacted the minister in charge of small businesses, Kevin Hollinrake, asking for Government intervention. Pressure on Etsy to change its reserve policy increased yesterday with the BBC following the Mirror in highlighting complaints. Ceramics seller Rachel Collyer told the broadcaster: “This is ruining my business - I can’t afford to buy any clay or glazes.”

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Hair extension maker Sarah Biddle said the “minimum reserve goes up with every sale, so it is impossible to get over the reserve amount to get paid anything”. An Etsy spokesperson said that it operated a “generous” payment system and the number of sellers hit with a payment reserve is under 9% - but with six million worldwide sellers that could leave 540,000 businesses struggling.

Andrew Penman