Etsy has been coming under fire for its practice of holding sellers’ funds in reserve – the story blew up in the UK when the BBC wrote about the hardship sellers are facing as the result of the financial squeeze.
But as sellers were sharing the BBC article (and forwarding it to EcommerceBytes) on Monday, Etsy sent an email inviting sellers to apply for a cash advance to fund their businesses through a program called YouLend, according to Etsy expert Cindy Baldassi and sellers posting in the Etsy discussion boards about the lending service.
Baldassi said some sellers found it ironic that Etsy was offering cash advances when it was holding some sellers’ money in payment reserves, “forcing some of those sellers to take out loans or run up their credit cards to pay basic bills,” she wrote on a post on LinkedIn.
The BBC interviewed an Etsy seller who said she could not see any reason why Etsy was suddenly withholding her funds after being active on the marketplace for the past 4 years. The seller said she woke up to a notification informing her that her account had been put on a 90-day period of reserve, holding 75% of her sales. “The 62-year-old said she would have made £5,000 this month and cannot take out a loan while she waits for the money,” the BBC reported.
The increase in accounts impacted by reserves appeared to have spiked beginning in April, and Etsy addressed it in an announcement post in May, where it explained: “When a reserve is active on a seller’s payment account, a percentage of a seller’s earnings on each physical order they receive will not become available for deposit for a period of time. This helps to confirm that the seller is able to keep up with customer demand by shipping on time and providing reliable and trusted customer service. Funds in reserve are released for deposit once the order is shipped and in transit (confirmed through tracking events from your postal carrier). In fact, on average in…
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