From the announcing seller protection thread here:
http://www.etsy.com/teams/7718/site-help/discuss/10975623/Jaime DeLanghe from peanutbutterandjaime says Highlighted Post
Matt D from collageOrama says Edited on Sep 26, 2012
So, we have to put the processing times in our listings to be eligible for this?
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Hi,
I'm Jaime, the Product Manager for Seller Protection and our new dispute system.
Seller Protection is optional for every transaction. In order to qualify for guaranteed protection, you'll have to have a processing time in your listings. This doesn't mean that you'll necessarily lose a dispute if it's filed against you. Etsy will review a dispute before any action is taken against your account.
Posted at 2:25 pm Sep 26, 2012 EDT - Report this post
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Not having processing times means you aren't guaranteed seller protection. I guess that is why some seller's believe it is "voided".
If you don't have processing times and have a dispute with a customer I think it means what Jaime said...a transaction would be reviewed prior to action being taken on a shop. If a shop is not in line with what Etsy recommends for shops then I would imagine they would lose the dispute.