Whether you’re an Etsy seller just starting out or an experienced one, you may have received a message on your dashboard or an email like this from Etsy:

In recent times, payment reserves have seen an increase, likely due to the rise in fraudulent activities and scammers on Etsy. These dishonest sellers create accounts, collect payments from unsuspecting customers, and disappear without delivering the products. Unfortunately, the actions of a few bad actors have led Etsy to implement payment reserves.

Let’s delve into the details of payment reserves, discuss common reasons for their imposition, and provide effective strategies to prevent or minimize their impact on your shop.

What are Payment Reserves?

Here’s what Etsy says https://help.etsy.com/hc/en-us/articles/360058722214?segment=selling

Basically, Etsy will hold a portion of your sale proceeds (after collecting their fees of course) for a certain period of time IF you do not provide tracking for your order. The percentage of proceeds held and the number of days it is held for can change depending on certain parameters of your shop (your shop’s age, your quality score, why a reserve was imposed, etc).

Usually, Etsy will send you an email explaining why you’ve had a payment reserve put in place. However, it has been my experience that sometimes that doesn’t happen. Check your inbox and spam folders but if you don’t see anything contact Etsy help through the links on your dashboard.

There are some common reasons that Etsy has for placing reserves on accounts – some of these you can prepare for:

  1. Not using tracking numbers on orders. Whether you buy your labels on Etsy or through another shipping service make sure that you always have a tracking number attached to your orders. If you have a lot of orders with no tracking or Etsy cannot validate your tracking info a reserve may be placed. Unfortunately this means that if you do a lot of local orders you could be penalized. Even if you put random numbers or a date in the tracking number field to satisfy Star Seller, Etsy won’t be able to validate it or track it since it’s not a valid tracking number. This is also a problem for some countries where tracking information is cost prohibitive so many sellers do not purchase it. Hopefully Etsy has a “fix” for these legitimate issues soon.

  2. Influx of new orders. If you all of a sudden experience a sharp increase in sales this could set off alarm bells with the Etsy system. It’s unfortunate that you could be penalized for your shop doing well! But because there were so many instances of “get rich quick” schemes and scammers on Etsy they have put measures in place to protect buyers. This means withholding part of your money until they see that orders have been sent out. Use tracking and you should get your money much sooner!

  3. Shipping too slow or having overdue orders. Etsy aims to safeguard buyers from fraudulent sellers, and as a result, having a significant number of orders that are either past due or unshipped can be problematic. It is worth noting that this can occur even if your orders are within the specified processing times and if you have maintained open communication with the buyers.

  4. Copyright or Trademark issues. Infringement cases can be a spot on your Etsy record. Make sure that your designs are original and you never use trademarked phrases, logos, brands, etc in your listings. For more info on this topic see this blog post –> HERE

  5. Excess returns or cases. Customer services issues carry significant weight on Etsy. If you’ve had a lot of recent cases against you or many refunds/returns that could be an issue for your shop. While occasional cancellations, returns, or refunds are acceptable, patterns of such behavior can become problematic.

  6. You’re a brand new shop. Payment reserves are more likely for brand new shop that doesn’t have a history on Etsy. But, it can happen to any shop.

Payment reserves can happen to ANY seller on Etsy. Whether you are a new or a seasoned seller, whether you sell physical or digital products, and if you are a Star Seller or not. And, yes, it’s legal and part of their Terms of Service you agreed to when you signed up to sell on Etsy – it was just something that they didn’t normally exercise until recently.

So what can you do to prevent or mitigate the impact of payment reserves?

  1. Always use tracking

  2. Ship on time

  3. Don’t have any copyright or trademark issues (check USPTO.gov)

  4. Have a savings account with “emergency funds”

  5. Don’t put all your eggs in one basket – have other ways to sell your products (whether it’s a stand alone website, Facebook, TikTok, boutique, etc)

Have you had your shop put on payment reserves? Let us know in the comments below.

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