Online marketplace Etsy has been accused of withholding money from sellers through its “reserve system”.
Etsy has been criticised by its sellers for putting 75% of their takings on hold for 45 days as hundreds of small businesses received an email informing them the marketplace was actioning a reserve system.
Etsy said payment reserves were used to “keep the marketplace safe” and cover any potential refunds, according to the BBC.
Its payment policy gives reasons for putting money on hold, including a sudden increase in sales, a shop making its first sale recently, the shop committing a policy violation and other risk factors.
Some sellers told the BBC that two reserve periods were enforced on them consecutively, with one seller saying he had “no idea” why his money was being held. Hundreds of affected sellers are now planning a “strike”.
An Etsy spokesperson said the “vast majority” of sellers receive their funds as soon as they make a sale and that the reserve system was used by many online sellers.
However, Amazon’s level of reserve is around 3% for established sellers until any disputes are resolved.
Small business commissioner Liz Barclay said Etsy’s “level of reserve is new to us” and that the commission was receiving reports of many small businesses being owed “several thousands of pounds”.
“My big worry is that for, hundreds of thousands of businesses, this is their only source of income. Anecdotally, we hear that many sellers are women or minority groups and they need this money to pay the bills,” she added.
It is understood that a representative of Etsy has met with UK government officials.
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