PEP Episode 016 — Uncovering the Truth Behind Etsy’s Reserve Payment Policy Changes featuring Chiarra Lohr

Podcast Description:

ver wondered how Etsy’s reserve payment policy impacts independent sellers? Journey with us into the depths of online commerce, as we unravel how small businesses are grappling with the changes in Etsy’s payment processing policies. With special guest Chiarra Lohr from the Indie Sellers Guild shining a light on the issue, we join Global Legal Law Firm attorney Bryce Van De Moere, and paralegal Serenity Wood, to discuss how recent policy shifts have left sellers with significantly reduced profits. Imagine selling an item for $17, only to be left with a mere $6 after deductions for reserve funds.

Navigating the treacherous waters of online selling, we delve into the struggles that artisans face when trying to set up shop outside of Etsy. We explore the challenges of finding alternative platforms and marketing strategies and the sense of powerlessness sellers feel when policies negatively impact them. Chiarra provides valuable insight into the possible role of Silicon Valley Bank in Etsy’s policy changes and emphasizes the necessity of collective voices like the Indie Sellers Guild in advocating for a fairer digital marketplace.

Finally, we tackle the contentious issue of Etsy’s reserve limits and the potential harm they pose to small businesses. We offer insights into possible solutions, such as raising awareness within Etsy, advocating for an appeals process, and even the possibility of a class action lawsuit. Chiarra encourages unity among merchants, emphasizing the power of shared stories in potentially alleviating the burden of seeking legal help. Join us on this enlightening journey as we underscore the urgent need for change in Etsy’s reserve limits and highlight the steps that can be taken to initiate this change. Visit out guest:


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Speaker 1 (00:00):

Welcome to the Payments Experts Podcast, a podcast of global legal law firm, ISOs, FinTech, PayFax agents, merchants, processors, acquiring banks and card brands. If these terms mean something to you, this podcast is for you. If these terms aren’t so familiar, this podcast is even more for you. We hope you enjoy this episode of Pep, the Payments Experts podcast. Welcome to the Payments Experts Podcast, a podcast of global legal law firm. In today’s episode, we are very excited to have with us a special guest, Chiara Lohr, who is with Indy Sellers Guild. We have in-Studio Senior Associate Attorney Bryce Van Damore, as well as Paralegal Serenity Wood. Welcome and thank you for joining us today. Thank you, Jamie. Today we’re talking about Etsy and payments and reserve funds. It’s going to be very interesting, kind of a unique episode from what we’re used to here at the Payments Expert podcast.

Speaker 2 (01:10):

Yeah, real excited about it.

Speaker 1 (01:12):

Chiara, why don’t you tell us a little bit about your organization and what you guys do?

Speaker 2 (01:15):

Yeah, so the Indy Sellers Guild is a nonprofit that fights for a better fairer internet where makers, artists, designers, and other creative indie sellers can run sustainable online businesses. And it grew out of the grassroots Etsy strike that happened back in 2020 as there’d been several just kind of a series of anti-seller policies coming from Etsy and really very little genuine conversation between the sellers on the platform and the platform etsy itself. And so sellers felt that they really needed to take a stand with how they were being treated and give stronger feedback back to Etsy about how these policies were affecting them. And since then, from that grassroots movement, we realized that we needed a long-term organization to continue that work because of, we specifically focus on handmade, vintage and craft supply sellers, the sellers on Etsy, but we also advocate for them even if they sell on other platforms. But in general, everyone who works kind of with a platform for their workplace is in this kind of new working environment where there’s not a ton of rules and not a ton of resources or groups kind of fighting on their behalf for their interests. And so that’s what we’re working to do.

Speaker 1 (02:48):

Before we get into the meat of this episode, I do want to say Chiara. I recall when you and I were first speaking on the phone and I knew right off the bat I’m like, we have to have Chiara on this episode. I will tell you that I also immediately thought we need to get Serenity in on this episode as well. Serenity and Bryce will confirm this is our law firm’s most stylish person, very conscious of everything her office is, could be in better homes and gardens. So we just wanted to connect you guys. I think you guys are probably kindred spirits in many ways.

Speaker 2 (03:22):


Speaker 3 (03:24):

I’m so excited to talk about this topic. Artisans and handmade goods are near and dear to my heart, and I was a small business owner selling artisan goods for quite a few decades, so

Speaker 2 (03:38):

Wow, that’s wonderful.

Speaker 3 (03:39):

I understand a lot of these issues.

Speaker 2 (03:42):

I was going to say, I’m sure many of this will then sound familiar for sure. Alright.

Speaker 4 (03:49):

I had no idea that any of this is happening. I don’t shop on Etsy, but I’m aware of Etsy and I had no idea that they were getting such a raw deal.

Speaker 2 (04:01):

So I guess to dig right into it, let me give you just a brief background on what happened. And so Etsy, right? It’s big platform and then there’s millions of sellers and I think their current count is over 6 million sellers on Etsy internationally and about sixty-two percent are in the United States and they’ve always had this reserve payment policy. It’s in their terms of service. We did go read it. I listened to your last podcast on payment reserves in general and the first thing was like make sure you read the policy around it. I’m like, we did do that. See bryce, the

Speaker 1 (04:45):

Podcast is making a difference already. That’s fantastic news. Chiara, we love it.

Speaker 2 (04:49):

It’s the six of my year old, but one, the policy is actually quite vague, doesn’t give a lot of details, but it’s always been there, but all of a sudden, and we don’t know why, back in May they changed kind of whatever metric automatically will put a shop in a reserve payment and it started hitting a lot more shops. We started hearing about it from a lot of shops, particularly shops that kind of have a specific business model, which I’ll get into here in a sec. In terms of straight numbers, it’s super hard to pin down. Etsy says it was less than 1% of active sellers, but again, to be an active seller, all that means is you’ve had a single transaction with Etsy within a year, so that might be listing one item or having one sale within the last year. So how many of actively running a small business and making an income from that were affected?


It’s hard to say that percentage, but even 1% of all of the Etsy sellers is still over a hundred thousand people. So it was a lot of stories we were getting talking about this and the way the policy worked is you’d make a sale, say your sale was $17. I saw this exact example from a seller, so I know it worked this way. You sell something for $17, then there’s $2 in taxes that brings it up to 19, and then you charge $6 in shipping. Cool, brings it up to 25, that’s your transaction total. Etsy does their own payment processing. They would then take out of that 25 say, okay, we’re going to keep, or I guess 24 $5 shipping brings it to 24, we’re going to keep 75% of that, so we’re going to keep $18 of it For a $17 item that you sold, they’re going to keep 18 and put it in a reserve account.


You don’t get any of that now you get this $25 left, you get $6 except wait, two of that was taxes. We got to take that and go pay that to taxes, so now you’re down to $4. Oh wait, you still owe Etsy all their fees you owe. They’ve got a 5% fee and then a processing fee and a listing fee. And so by the time it was done, this particular seller, they’re like, we’re releasing your portion of the funds. It was $2 and so one, it’s one. It was just way too much. That was a crippling amount of money to be withheld. People also got very little to no warning. They said they sent out an email, but a lot of people either didn’t get them or the email was sent when the reserve happened. So there wasn’t a, Hey, this is coming up, prepare financially if possible. It was like you log into your shop and all your sales starting from a certain date, you’re just not getting most of the money.


And then what made it particularly difficult is, okay, you have that $2, you got Etsy will release the other funds, the other 18 that’s in the reserve when either they’ll automatically release it after 45 days, but they’ll release it sooner. If you ship with tracking, that’s synced to Etsy, but you only have $2 to ship with. So okay, you probably can’t buy shipping with tracking for the $2 that they sent you. So then you’re either pulling from your own money like other business funds to pay for that shipping or what happens if you’re buying the shipping through their system, is it automatically, okay, you need to spend $4 in shipping, it takes the $2 you have in your account and then it’ll pull $2 from your reserve, but now you owe money to your reserve, you’re below that $18, you’re below that 75% minimum, so you pay your shipping, you ship it out in a couple days, the tracking will register, you’ll get your $18.


Well, but in the meantime you sell another item. Well, but this time, instead of getting that $2, you owe it to the reserve because you went into a deficit while to buy the shipping label for the next one. So now you have to spend $4 to buy a shipping label and that comes out of the reserve. So people would end up just in this horrible feedback loop where they weren’t even getting that minuscule amount. It averaged out to being about 10% of the transaction total that people were actually getting after taxes and fees were taken out of the 25% and they weren’t even getting that because it ended up owed back to this reserve account that had to stay at this certain threshold. And it absolutely devastated these small businesses and in particular it hit, there’s certain businesses on Etsy that just the way they operate and kind of the automatic metrics that Etsy uses just really weren’t very compatible.


So anyone that didn’t ship with tracking, say they sold stickers and people didn’t want to pay $4 to ship a sticker, they wanted it in a letter envelope. Okay, those ones, they don’t ship with tracking. You’re more likely to be in reserve people that ship handmade furniture, well, that’s not going to ship with UPS. You have to have a specialty shipping carrier and that shipping specialty shipping company probably isn’t synced with Etsy because they’re not synced with everybody. It became a huge issue in the UK because when they set up these shipping carriers that were going to share their tracking information and help the funds be released sooner, they didn’t set up with the UK royal mail, so nobody in the UK could get their funds quickly or get their tracking recognized. I believe that’s what I learned from talking to officials over there. And then in particular, of course, the made to order businesses really were suffering because a made to order business, you don’t have it in stock, you get that order in and then you go make it, and usually you take the money from the order to go by your supplies and especially if it’s custom, see Serenity’s nodding, you know exactly what I’m talking about.


Exactly. I’m curious, I’m curious.

Speaker 1 (11:17):

Serenity, is this, I’m sorry to cut you off, I didn’t mean to hear

Speaker 2 (11:19):

No, go ahead.

Speaker 1 (11:20):

Is this because I saw Serenity nodding in your head as well. Is this why you got out of Etsy or is there any connection here at

Speaker 3 (11:25):

All? So I never sold my products on Etsy because I worked in the culinary sphere, but I understand that several chefs and bakers do have custom orders through Etsy. All my products were locally oriented, but that always was a problem of having to advance money for the next event or the next order that you’re doing and having those reserves so that they were able to continue and anybody making something custom order is going to deal with that problem, has to balance their budget and figure out how they’re going to long-term survive through all of those varying degrees, especially in the holiday time when you get an influx of orders.

Speaker 4 (12:13):

How was Etsy justifying the reason for the reserve? Because most of the time reserves are to guard against chargebacks, but since none to my knowledge your an average vendor is not mass producing anything. So these are custom orders, a lot of them. So where is the chargeback risk?

Speaker 2 (12:37):

Yeah, and that was part of the thing is the mets. So Etsy never Etsy as far as I know, has yet to tell any seller the specific reason they were put in reserve. Every story we’ve heard, a seller would contact Etsy support and they’d be told, we can’t tell you the specific reason to protect the security and integrity of our system. We can just tell you the general list of risk factors that might get you put, have this kick in. And it was things like having a whole bunch of orders come in at once, which again, that can happen where someone will, there are cases of just straight up fraud where someone will open an etsy shop, take a bunch of orders, and then just close the etsy shop and disappear. But there’s also, that tends to be new shops and they do put this more often on new shops, but we were all of a sudden seeing it a lot on very established shops.


The thing is, another reason you might get a sudden influx of orders is if you have a seasonal business and you have a peak time, people were like, I do this every year and it’s the same and I’ve never had a problem. They were also, I think Etsy has a purchase protection program where if you’re a customer and you don’t, your item is either arrives and it’s not as listed, it is broken or it never arrives, you automatically get a refund. And if it’s under $200 and you use Etsy shipping, Etsy will pay for that themselves. They don’t charge it to the seller, but if it doesn’t meet the criteria, it comes out of the seller’s money. And so they in particular seem to be hitting shops that had a long back order of orders, so they had a lot in their queue or orders that were processed late, which I’ll get to in a sec because that’s not really how it was working for a lot of businesses.


And so it’s like whatever system they’re using would see that and say, oh, you’re a risk factor because maybe you’re not actually going to be able to fulfill all these orders and then these customers are going to get upset, say it never arrived and ask for that refund. But they would happen to, you’re talking about working in the culinary field, we had a story from someone who does custom cookies and she’d get an order in and obviously this customer does not want their cookies immediately. They want them right before the event so that they’re edible cookies, but Etsy only lets you put in a processing time of up to 10 weeks. You literally can’t in their system make it longer than that. You used to be able to leave it blank and then they changed it, and the max you can do is 10 weeks.


Well, if somebody orders cookies for a baby shower in three months, that order’s going to show as being processed late by you because you’re doing exactly what the customer wants. And there was just nothing to account for that. They didn’t seem to be basing the metrics on if this shop had ever had requests for refunds or charge backs in the past, if it had a history of poor reviews or issues with customers. It was all based on this shipping time, shipping with tracking and late order metrics, which just given the diversity of the type of shop on Etsy ended up really not working for a lots of kinds of businesses and unfortunately, particularly the custom and made-to-order businesses that Etsy is known for. That’s why people go to Etsy and all of a sudden those are the shops that can’t get their money from Etsy and are being told they’re a high-risk business even though they’ve been there for 10 years without a problem. Exactly.

Speaker 1 (16:27):

It makes you wonder how it’s sustainable at all. I mean, hearing the story here, chiara, literally, I’m wondering why is anyone on etsy? It almost sounds like how are these merchants, these creators getting by? Are they getting creative? What are some of the ways that people are working around the Etsy hurdles?

Speaker 2 (16:47):

Yeah, it’s a real struggle. Part of it’s that Etsy Etsy has always had pros and cons, but in the last several years it’s, its policy has been changing faster and faster and becoming more and more difficult for those actual small shop and custom order artisan type business. But they have a huge monopoly on the market. There’s other shops, there’s other marketplaces, but they’re one a lot smaller. They don’t have as much traffic. They’re often fairly niche. So there’s one called Ravelry, but it’s only for knit and crochet items or fiber arts. And then there’s others, but they’re like US only or there’s others that are good, but you have to handle all the taxes and shipping fees and vat by yourself, which is a lot more complicated. So it makes it really hard to leave Etsy, but you end up not being able to afford to be on etsy.


And it really puts sellers in this hard spot. A lot of people try and they get creative. You do social media marketing, but that’s a whole other stressful thing and has pros and cons. A lot of people, what they end up doing is having their ready-made stuff in their etsy shop with notes everywhere, and I’ll put thing they put in the package that’s like, if you want my custom work, go to my website because that’s where I can do those kind of orders and not get penalized by all these systems. We haven’t even gone into the other policy issues on etsy. We’re just talking about the payment reserve one, and that one just happened in the last couple months.

Speaker 1 (18:43):

On that point, I’d love to hear Bryce, we represent processors and Isos and whatnot. What is the argument to be made? Because someone listening to this episode right now might be thinking, well, why are these even legal? How can Etsy even do this? What’s the purpose of reserve funds bryce?

Speaker 4 (18:59):

Well, the purpose, as I intimated before, the purpose of reserve funds is solely to protect the processor from any risk. And normally that’s in the form of chargebacks because the customer’s going to want their money charged back immediately. And so etsy, by and large is going to have to cover that for the vendor to get it there and the time parameters that the customer wants, and then they’re going to have to turn around and go after the merchant to be reimbursed. But that’s my main question is where is the risk? These are not mass produced items, and I would venture to guess that the ticket price or the average sale is probably not enough to justify the amount of money that they’re holding. And I’m going to read between the lines here. I’m guessing that Etsy has instituted no caps on the amount of money that they can hold or the length of time that they can hold it. Is that correct?

Speaker 2 (20:04):

That is correct, yeah. There is no total limit on how much they can hold, and there is each, so for each item you’re supposed to, it’s kind of rolling. So for each sale, if you don’t do tracking, you’re supposed to get the money released in 45 days. But the overall, how long this affects every sale coming in it says can last 90 days or until they feel the risk is gone, essentially it is nothing. And the other thing, because like I said, we’d read the policy, the terms of service, so it doesn’t give a limit. It doesn’t give a time limit, and it doesn’t say the percentage. So everyone was floored when it was seventy-five percent of the transaction total. That’s nice. Not even of the sale price. Everyone’s like, this is insanely high. And when we called around and asked, everyone’s like, yeah, that’s real high. And that’s something that sellers could not have prepared for. It wasn’t even in the terms of service that they agreed to by using etsy. There was no, how were they supposed to know and prepare for that.

Speaker 4 (21:19):

And there’s probably no ability to negotiate with Etsy at all. No, you’re a captive audience.

Speaker 2 (21:25):

Yes. All you can do is leave etsy. So that’s what I found so interesting listening to your last podcast, it is such a different situation. You were talking about how those situations are often where the relationship between the payment processor and the company has ended and it’s the money left over and stuff. Ongoing business is still on etsy. They can’t negotiate these terms. It’s very much a, if you want to sell on Etsy, you take our terms. Etsy can also change their terms anytime they want. And your only choices only ever to leave etsy. If you leave etsy, you don’t get to, I think you used to be able to copy them, but when you sell on Etsy, it’s not like you get the contact information for your customers. So if you leave etsy, you lose whoever shopped from you on etsy unless you’re able when as sales come in to redirect people over. But then you’re also, if you do that blatantly on your shop, you’re violating Etsy’s terms of service because you’re not supposed to direct people off site. I don’t know if you can even port your reviews over anymore. I think you used to be able to do that, but you really, it’s not just like, oh, I’ll move my shop. You’re giving up a substantial thing you’ve built, if you leave your etsy shop with your history of sales and your, that’s going to be

Speaker 4 (22:50):

The most important part right there. Yeah, the customer list. Yeah.

Speaker 3 (22:53):

And also in addition to that, you mentioned the majority of these artisans are they’re working out of their home. It’s a one person operation. So even in the media literacy element, there may not be the funds to, or the skillset to create a website to be able to offer another channel to bring customers on. So etsy really is the place for those type of artisans to provide their services.

Speaker 2 (23:28):

Exactly. I think 90% plus work out of their home, eighty-four percent and above are a business of one. And yeah, Etsy is very easy, very low bar to entry, very inexpensive to get started. There’s services that will help you set up your own standalone shop, but usually you either need to be fairly good at setting up a website or you got to spend some money to have an commerce level plan on whatever service you’re using. You have to, if you try and do a free website, then you got to set up a payment processor to accept your money, and it takes time and it takes brain power that you may not have when you’re in the middle of just trying to fulfill the orders coming in on etsy and stuff. So yeah, it really can be very difficult to leave, but there is just an individual seller has so little ability to do anything when these policies affect them negatively. And that’s part of why we form the guild and part of what we’re doing is because if we can get a lot of us together, then we have some more possibilities, a little more power in the situation.

Speaker 4 (24:45):

I did a little bit of research preparing for this, and I noticed that Silicon Valley Bank was the sponsor bank for etsy with the main folder. So if you know who, who’s the bank holding all this money now?

Speaker 2 (24:59):

I don’t know. Actually. They don’t identify

Speaker 4 (25:02):

Any kind on the site.

Speaker 2 (25:04):

Yeah, it’s not something that has, if it’s publicized, it’s not something that’s obviously publicized in a just easy to find place. I know a lot of sellers had delayed payments when the Silicon Bank Valley collapsed from Etsy. Normally people, I think it was delayed like a week from when people normally got the money’s transferred from Etsy to their own account for sales. But yeah, with one of our team over at the Guild is a researcher, a professor that research is kind of the crafting industry. And she was looking into things a little bit and yeah, she was thinking, she was wondering if maybe this reason this happened was because the bank behind all this was telling Etsy, oh, we see some risk here. And so they changed their policies, and if they had to switch banks after Silicon Valley Bank collapsed, that would make sense why that change happened. And the timing does match that for sure. But

Speaker 4 (26:11):

Silicon Valley was trying to get a bunch of money to, I guess save itself from collapse and figured it would feed off the etsy perhaps,

Speaker 2 (26:22):

Maybe perhaps. Well, it happened after, so this started kicking in May. But if the new bank they got after Silicon Valley was like, wait a second. There is a lot of stuff like vitamins and herbs and body care, some of those higher risk industry items, those are sold a lot on Etsy. There’s a fairly moderate price point, but there is a high volume of items sold through etsy. It is billions of dollars each year. And so maybe whatever bank they switched to was like, we’re change. We’re not going to, we’re going to look at this risk differently. And so Etsy’s like, oh, we got to change how we do things as a result. And unfortunately, Etsy, etsy, etsy policies often on first glance, you’re like, I see why that would make sense if you had never run an artisan business, which is what everyone’s doing on Etsy.


That’s part of the reason we think we need an organization like the Guild. We keep pushing them to talk to us. We have this big pool of sellers that we talk to. We are all in the industry, and so we know these potential pitfalls, or we hear them immediately from people in ways that if Etsy really isn’t intending to cause this much harm, it’d be great if Etsy would talk to us and we could look at a policy like that and be like, okay, but what about made to order? What about someone who with large items, what about these situations? How are you going to make sure you protect yourself from the risk you need to, but don’t harm these businesses that are not actually risky and are just operating as they always have with no issue

Speaker 1 (28:07):

And giving them a voice or amplifying their voice by bringing them together. I think it’s a great thing because that’s something that’s been going through my mind during the course of this podcast episode is what would global legal law firm be able to do for some of these merchants, some of these creatives? It’s a tough answer. What are your thoughts, Bryce?

Speaker 4 (28:27):

My thoughts are really because, and I’m going by the card brand rules again, is that Etsy itself cannot have any of this money. They may be able to suggest to the bank how to allocate it, but the bank that’s backing this, we need to find out who that is. Immediately. I saw in my research that Paypal is locked in, so that leads me to believe maybe Stripe is involved. I am just speculating right now, but I think determining who the bank is is the most important way to get etsy’s attention, and they’re obviously not willing to share that

Speaker 2 (29:06):

Publicly. When I looked into that, because Jeremy asked the same thing, who’s their payment processor? And I went looking and all it says is that several years back, Etsy switched to being its own payment processor, and I was not, without doing more digging than I really have the skills for. I could not find what that meant. It

Speaker 4 (29:27):

Probably means they bought one and they subsumed it into their own organization, but they’ve got to be fairly large in order to handle that much processing. From what you said it before, like 6 million artisans,

Speaker 2 (29:43):

6 million sellers, yeah,

Speaker 4 (29:44):

Sellers. So that’s quite a lot of traffic. But yeah, I would try to put pressure on the bank immediately. I don’t think that Nc is actually calling the shots here. I think that the sponsored bank is the one with the real power and authority

Speaker 1 (30:02):

Trinity. After hearing Chiara speak and this whole episode, how likely are you to speak about etsy and recommend Etsy to friends and family?

Speaker 3 (30:16):

Personally, I still feel that Etsy is a great resource. There’s nothing else on the market for it. I do feel that it’s changed over time, and even just the culture around buying online. Amazon has had a big influence on that. People expect goods to arrive at a certain time, and it really dismantles a certain cultural methodology of you pay your local artisan to custom make something. And there’s this understanding in the relationship between the buyer and seller that the time and the creative freedom and the energy that’s going to go into purchasing a good, so there isn’t the rush mentality. So I definitely feel that it is on the shoulders of buyers to recognize what Etsy has to offer and to really put it in its right context because you can’t get, I remember for one of the events I had, I created this workshop centered around this Russian myth, and I had purchased a hand-carved stamp from Ukraine that this artisan had made.


There’s nothing I could have purchased anywhere else. Amazon’s not going to have something like that. And all of those little pieces do add an element to making that event special. And I suppose it really depends on what buyers are looking for, but if you do want something that has and developing a relationship, honestly, like you mentioned with the artisans, learning to distinguish between these giant merchants and the ones that really are more the one-off shops that are hand-carving it or spending quite a considerable thoughtfulness around gathering vintage pieces and putting them on their shop, learning to distinguish them for now, I think that that’s kind of what we have. Maybe have other thoughts on that? I mean, you mentioned a couple other platforms, but as of now, that’s all I know.

Speaker 2 (32:34):

Yeah, no, I completely agree. We always say, people will be like, why are you anti-etc? And we’re like, no, we love etsy. We want it to go back to its value of keep commerce human, which was its, that’s an I original important. Yeah, that was its original kind of ethos. And the changes that we get frustrated with are the ones that make it harder to create that relationship you’re talking about that make it look more like Amazon. So then customers expect it to behave more like Amazon and Etsy Sellers are like, we are not Amazon. We cannot, nor do we want to operate like that. And so a lot of what we do is about bringing awareness of these issues so that people understand who they’re actually, you’re working with a person and probably a person in their house. They’re not going to be able to answer every email, every hour.


They’re going to really want to work with you, but please be kind to them. Right? They’re another human. And not that it’s great to be unkind to just a customer service rep at a big company, but they’re really, they’re not this faceless organization trying to steal your money. They’re an artist in their basement most of the time. And so changing those expectations and creating, showing that what’s special about buying Artisan is that relationship and that connection in the way you can get something really special and different. And so trying to help foster that and bring that awareness to customers because customers, they don’t know. You have to be kind of in the weeds in this industry to know about all this stuff going on in the background and the ways that it is really difficult for sellers. People assume that everyone on Etsy with an etsy shop is this really successful, thriving little storefront in their hometown, and it’s like that’s not really what’s going on for most people. Clearly,

Speaker 1 (34:40):

Chiara, as we come to the end of this episode, it’s been absolutely awesome speaking with you, and I would love to have you back on at some point. Do you have any closing thoughts or final questions for Serenity or Bryce before we head out?

Speaker 2 (34:55):

No, I think, I’m trying to think, one of my main questions was why might etsy be doing this, which we already talked about. So then I guess four for sellers that find themselves in this position, is there anything they can do? Etsy support has been less than useful. It mostly just waste people’s time to try and get help that way. So

Speaker 4 (35:26):

I think that the easiest way from point A to point B is to make Etsy aware, and we can do it on a merchant by merchant basis that according to the Visa rules, at least I think it’s 6.1, the amount of the reserve has to be reasonably related to the amount of risk. And so if you were selling an $18 item, why do you have to build this massive reserve? I mean, when most charge backs are going to come in the first 60 days after sale, why would you need so much money? And I think that that’s the angle to exploit with them is that their reserve limits are just not reasonable, and that’s going to get ’em in trouble with the car brands, which is ultimately what everybody’s afraid of out in the e-commerce world is pissing off or making the credit card companies angry. But that would be my first thought.

Speaker 2 (36:27):

Okay. I will say that Etsy did after, there’s a big outcry about this in the uk and they did walk it back a little bit. They lifted the reserve for some sellers and they dropped it to 30% for some, but there are still people at 75% reserve. And the main thing is that they didn’t change those terms of service at all. Right? It still has an unlimited, there’s no cap on amount. There’s no cap on percentage. There’s no cap on time. They just said, we are going to adjust because we’ve heard that we’re responding to the pain points that you bring up, but there, there’s nothing concrete, there’s nothing in the terms of service. There’s nothing holding them to that. So the vendors

Speaker 4 (37:11):

Are pushing this basically is what they’re saying.

Speaker 2 (37:13):

Yeah. And so our concern is that, okay, we might’ve backed off this pressure for now, and then in three months when the BBC is no longer writing articles about it, they can turn it back on. And what would stop them from doing that kind of a situation?

Speaker 4 (37:34):

I would think that maybe instituting a verification like Twitter had at one time when you could verify that you actually were a legitimate, that you were the person that was tweeting this, maybe a verification that will get you under or get into a lower reserve amount, but that you have to provide some information to them that verifies your legitimacy maybe.

Speaker 2 (38:00):

Yeah. For us, one of the things I personally think is would, is the first thing that’s necessary is a very quick response appeals process. So if I understand they’re going to use some automated system to put people in reserve because it’s just way too, to have somebody doing that, but then you need a very quick and talking to a person with real power way to be like, oh, no, look, I’ve had to shop this long. I’ve had no charge backs or asks for refunds. My business model works this way. That’s why those orders show late. I can prove that I shipped it. I can prove the customer Got it. I can prove they agreed to this timeline. Please lift the reserve.. And the problem is that doesn’t exist at all. There is no way to do that. When people talk to Se support, they were told, we cannot manually lift the reserve for you. It’s impossible. We don’t have the power to do that. You have to simply, there was a list of risk factors and there was a list of suggestions to get you off reserve, but they’re like, we can’t tell you why it got put on and we can’t tell you what to do to get off and we can’t fix it for you.

Speaker 1 (39:07):

Is that true Bryce? Sorry, serenity. No. Yeah, exactly. It’s called kicking the can down the road. Absolutely not. Pass the buck. Pass the buck. Please go ahead. Serenity, what

Speaker 4 (39:20):

Authority do you have? Oh, did I say so? Okay. That’ll work. That’ll hold up. That’ll open in court. Yeah. No, the vendor does have options, and they’re being told this by a customer service rep. I would venture to guess that Etsy’s legal department would have a different take on that, and that’s why, I guess that’s another way that global legal can assist in this is that we’re going to get you to Etsy’s legal department or whoever, like I said, whoever the sponsor bank is that’s overseeing all this, because at the end of the day, if worse comes to worse and you had to file a lawsuit, we’re going to initiate discovery and they’re going to have to comply under penalty of law. They’re going to have to give us all this information that they say is so-called privileged without identifying the actual privilege. That’s another one I think they know they’re dealing with people that are not legally savvy. Correct. So they’re running a line that will allow them to kick the can down the road a little bit, and hopefully they hope the vendor just gives up

Speaker 2 (40:26):

And vendors that don’t have the capital to go to a lawyer immediately. Is there a way for sellers who all have a very similar story to kind of, I don’t know, pull this together? So the financial burden is not, so in working with global legal law firm is not so intense on any one seller. I don’t know if this is a class action type situation or if there’s just another way, if it’s the exact same problem for many sellers, if we can kind of, because I know most of them are not going to have the means to, especially with seventy-five percent of their money being held right now. Exactly. Yeah.

Speaker 4 (41:09):

It has all the makings of a class action, and it’s one that I would like the ability to explore.

Speaker 2 (41:16):

Fantastic. But

Speaker 4 (41:17):

If they’re all being held to the same standard regardless of their specific situation, this is not a one or one size fits all problem. And so I would venture to guess that, yeah, a class action would be

Speaker 1 (41:38):

Possibly we’re interested if it’s there. Yeah,

Speaker 4 (41:40):

No doubt.

Speaker 1 (41:41):

Chiara, one thing as well, if you wanted to pass on to your constituents, people that you’re speaking with often is if their damages are such that it’s high enough to where it would make sense to bring on legal counsel, have ’em reach out, because like Bryce said, it’s very true. It’s what we do. We can get this in front of their attorneys, whether it’s Etsy’s attorneys or the sponsor bank’s attorneys. We can do that, and that’s what we do. We can open up that conversation. So where it makes sense, obviously it’s not going to make sense on an $18 transaction, but when you have people that are in tens of thousands of dollars being damaged by this, then we can get involved.

Speaker 2 (42:20):

Fantastic. Corporate

Speaker 4 (42:21):

America has shown that it is more comfortable just paying off these merchants one at a time as opposed to solving the problem and making it fair for everybody involved. They’ll just pay as whoever’s making the most noise, and they’ll just move on. But I think as a law firm, we can get them to respond. There’s a lot of questions. Absolutely most, and again, I am saying it over and over again, but I want to know who this bank is.

Speaker 1 (42:55):

Yeah. I’m kind of curious myself.

Speaker 2 (42:57):

Yeah. Now I want to know. Yeah.

Speaker 1 (42:59):

Be sure to follow up with us. If we find it, we’ll let you know as well. Yeah, for sure. How can our listeners find you? I know you’re, but is there a particular website, I’m sorry, email address that you’d have them reach out to?

Speaker 2 (43:13):

Yes. It’s just That’s our general inbox. Myself or Christie, the president will see it. Anything sent to that inbox, feel free to reach out. We’re on all the socials, Instagram, Twitter, all under Indie Sellers Guild. You can find us anywhere on that. Yeah, so lovely to have this conversation. Thank you so much. And then, yeah, if there is any options, I know I’ll definitely, especially the ones that reached out and were like, I had $10,000 held.

Speaker 4 (43:51):

That’s what I was going to say,

Speaker 2 (43:54):

But I know especially for a class action, I personally spoke with 50 sellers, and then we have a petition with over a thousand signatures, and we’ve been getting stories every week of people who are experiencing this problem, and they’ve sent us screenshots and emails, their conversations with Etsy support, so we’ve got all of that. We’re just waiting to be told what to do with it, essentially. So if there is an evil trick,

Speaker 4 (44:27):

There are legal trade, what’s the word I’m looking for? The green sheet

Speaker 1 (44:35):

Trade papers

Speaker 4 (44:36):

That just deal with legal issues and communicate to lawyers. I think that it would behoove you guys to actually put an article or two. I mean, we can help you.

Speaker 1 (44:47):

It’s great. We can connect you, we can

Speaker 4 (44:48):

Help you. We get that. Oh, fantastic. And let other attorneys know about it. I mean, blood in the water. Yeah,

Speaker 1 (44:54):

Absolutely. You might be getting a lot of calls after this Chad.

Speaker 2 (44:59):

Okay. Exactly.

Speaker 4 (45:02):

Ultimately, if the reserve is getting to a point that is just untenable, I would think that just even writing them and demanding the money would be an option would get some results.

Speaker 1 (45:17):

And we do that kind of stuff all the time, which we do all the time. All the time. We get results for our clients in that exact realm all the time. We’d be happy to help.

Speaker 2 (45:23):

Okay, fantastic. I will definitely let everybody know.

Speaker 4 (45:27):

Yeah, they can’t hold it forever just because they have to give them on.

Speaker 1 (45:32):


Speaker 2 (45:33):

Oh, I’m

Speaker 1 (45:33):

Sorry. Sharon,

Speaker 2 (45:34):


Speaker 1 (45:34):

Giving you the last word. Go ahead.

Speaker 2 (45:36):

No, I was going to say that was the thing that was getting us, like people would be asking, how is this legal? I’m like, well, reserves are legal. We called and asked, but everyone’s really a reserve where they’re like, we can take as much as we want for as long as we want, and we don’t have to tell you why, and we don’t have to tell you what to do to get rid of it. That seems insane. Yeah.

Speaker 4 (45:59):

It’s grabbing me and it just gets me salivating. I

Speaker 1 (46:07):

Excellent. Well, Chiara, it was absolutely awesome having you on today. To our listeners, thank you for listening. We’ve had Chiara Lohr with My apologies on that. Bryce, who wore a new T-shirt today. Awesome to see. Serenity, thank you so much for joining us today. This has been a lot of fun. This has been The Payments Experts podcast, a podcast of global legal law firm. Thank you for listening this long. See you on the next one. Thank you. Thank you for listening to this episode of The Payments Experts podcast. New episodes first and third Thursdays. If you’re interested in learning more about Pep and how Global Legal Law firm may be able to assist you, please visit us at To schedule a free consultation, give us a call at (888) 846-8901 or email us at pep at And once again, thank you for listening. 1, 2, 3. Come on.

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