Etsy Faces Accusations of Withholding Payments From Sellers — Retail Bum

Online marketplace Etsy has come under fire from its sellers for introducing a controversial “reserve system.”

The new policy, which withholds 75% of sellers’ earnings for a prolonged 45-day duration, creates significant financial difficulties for sellers who depend heavily on their earnings to meet material expenses and daily needs.

Etsy is today a vital platform for numerous young fashion designers and small businesses, boasting 93.9 million active users as of Q4 2022. The company’s influence has significantly grown with its acquisition of Depop, Elo7, and Reverb.

According to the BBC, hundreds of small businesses received an email from Etsy notifying them of this alteration, resulting in significant backlash.

The main purpose of the reserve system is to protect the marketplace and ensure there are sufficient funds to handle potential refunds. However, sellers are voicing their frustration and bewilderment over why their hard-earned money is being held this way. Some sellers have even reported being subjected to two consecutive reserve periods, exacerbating their concerns and difficulties.

Several sellers interviewed by the BBC conveyed their distress over Etsy’s actions as they struggled to understand the company’s…