HELP - Etsy refunded completed sales because I couldn't verify my identity in time

[#1]

I'm a new seller on Etsy and I'm pretty disappointed. I received a notification in November of 2024 that I had 60 days to verify my identity. This was no easy task. I've been ill and practically bedridden on and off for the past four years. I started my small business because I'm finally starting to feel better but everything is still hard to do because of muscle atrophy and the last bit of lingering illness. My license expired in 2022 and I was way too sick at the time to do anything about it. By the time I felt good enough to go get an ID and could find an affordable wheelchair to rent, I was too late to verify my identity before Etsy put my shop in vacation mode. The notification stated that pending sales would be refunded. But Etsy refunded some of my completed sales that were completed over a month ago. Is there anything I can do? Is there any way I can contact Etsy?

P.S. I have a temporary ID but my actual ID might not arrive for 8 weeks. Etsy doesn't accept my temporary ID.

[BeetleGlassArt]

@CarpetCollectionAUYes, I read it. None of the notifications or emails I received said anything about returning funds or doing anything to completed sales. Their own policy states that they will only issue refunds to customers for pending sales. All of my sales were completed nearly a month ago. I have screenshots of every notification and saved every email. There's nothing that states funds from completed sales will be returned to customers. I also verified my bank account with Etsy before I even started selling. That wasn't an issue. Unless I missed something in their policies, which is totally possible, I have not seen any language describing what you listed in your response regarding consequences of failing to verify my identity.

[CarpetCollectionAU]

@BeetleGlassArt What you are not understanding is the fact that Etsy cannot legally deposit funds into an unverified Bank Account. Not can they keep them for themselves. The only option is to refund.

BTW Etsy can "hold" funds for 180 days after a Shop closes pending refund requests.

Yes, your account was initially "verified" but is is not now and that is why Etsy had to refund as you continued to sell after being asked to provide ID documents which you do not have.

It does not matter if Ordedrs were "completed"or "pending", if there were funds in the account after the stipulated 60 days, Etsy had to do something with these funds. 

[TrinketDrawersUK]

@CarpetCollectionAU  But her bank account was verified by Etsy and the orders completed, not pending. No excuse for Etsy to refund. 

[CarpetCollectionAU]

@TrinketDrawersUK As they say in the movies 'Nothing stays the same way forever".

This Shop was initially opened in 2014. Things were different then. If I recall correctly, US Sellers did not have to go through the same ID / Bank Account Verification process as did Selleers from most other Countries.

About 2 years ago, Etsy introduced "Plaid" verification for US Sellers. 

For the past few Months Etsy is asking Sellers to re-verify ID as part of the requirement of the INFORM Act for Marketplaces to conduct regular and continuous verification checks.

We do not know all of the facts in this case but there are 4 things we do know

1) This Seller recently returned to Selling after a long break. When she reached $ 500 in Orders Etsy asked her to re-verify her ID. That is perfectly normal.

2) This Seller noticed a mistake on the Name on her account and  attempted to correct this

3) Etsy then applied the 60 day "warning" of suspension if ID documentation was not supplied and approved.

4) This OP is unable to provide any Government issued ID

Just because an account was approved in the past does not mean that it is approved today. After all, that is what this whole process is designed to achieve - to weed out accounts which have been set up incorrectly and which no ;onger comply with the present day regulations and laws.

Unfortunately, there will be some "innocent" small Sellers caught up in this net set to catch large scale fraudsters.

[vintage4creations]

Perhaps @ModKenneth  or  @ModJose can get you some help.  

[BeetleGlassArt]

@CarpetCollectionAUIt does matter if it's 'completed' or 'pending'. Wording matters. Multi-billion dollar companies are brought to court and lose due to the tiniest details of wording (or lack there of) in their contracts. If the wording of their policy included all orders, then so be it. But I have not seen any language in their notifications, emails, or in their policies that state anything other than pending sales will be refunded to customers if I failed to verify my identity within that 60 days. I'm not saying it doesn't exist. But I have not been able to locate anything that says what you're saying. Also, only 3 of my sales have been refunded. But all of my sales have taken place in the last 60 days. That's also what makes it seem like an error. If their policies and practices are not clearly listed and available to sellers, they've breached the terms of their own contract. I'm looking through their policies for what you've shared and I'm just not finding it.

[CarpetCollectionAU]

It a Shop is placed on "forced vaction" pending ID Document provision and approval, how can there be and "pending orders"?

I really believe Etsy means "funds for Orders which are on hold pending Bank Account / ID Verification"

If if just meant "orders received but not sent" this would be counterintuitive as the purpose of the INFORM ACT is to ensure that the funds are sent ONLY to a legitimate Account Holder with a Verified Bank Account.

[EccentricHandbags]

Did you email Etsy?  You need to start a support ticket.  Don't start multiple ones or it just sends you to the back.  If the first response doesn't help then you go to the bottom and click on -still need help- or something like that.  

[BeetleGlassArt]

I have not found a way to file a support ticket. Can you advise how to do that or at least where to find that? I tried to look around the Help Center. But I'm only pointed in the direction of articles, pages, or FAQ.

[PrairiePrimitives]

@BeetleGlassArt Try this page for opening a Support ticket. 

https://help.etsy.com/hc/en-us/requests/new?segment=selling#issue_sell_bank_account-solution_primary

[BeetleGlassArt]

@CarpetCollectionAUMy shop wasn't placed in vacation mode until after the 60 days. It just started today, I believe.

[BeetleGlassArt]

@CarpetCollectionAUPerhaps, but it doesn't matter what your or I infer their policy to mean. What matters is what their policies actually say. I doubt any court would ever honor what a business intended but didn't explicitly state. They're violating the terms of their own contract by refunding completed sales.

[PrairiePrimitives]

@BeetleGlassArt I haven't read thru Etsy's policy about this but, in general, I would agree that courts should require companies to follow their published policies. 

[CarpetCollectionAU]

I understand that you are upset but @bradgoodell has explained the US Legal regulations and the implications for all on-line Marketplaces very eloquently.

Thank-you @bradgoodell 

Usually when a Shop has not been verified, Etsy places it in "vacation". As these new practices to comply with the INFORM act are very new we are just learning how Etsy is maanagfing its' obligations

You say "My shop wasn't placed in vacation mode until after the 60 days. It just started today, I believe." That is good to know. Thanks for the information. This means that Etsy is giving Sellers 60 days "grace" to comply with requests for ID documentation. Any Seller who continues to make sales during this period when they know they cannot provide satisfactory documentation does so at considerable financial risk, as I am sure you now understand.

Despite the fact that you think otherwise, the intention behind my posts was to warn against false hopes that any appeal would be successful given the information you provided.

It is clear Etsy is obliged to comply with Federal Law.

I am in no way defending or criticising the manner in which Etsy is implementing this compliance, but I am saying that Etsy has set "limits" and every Seller is obliged to work within these "limits".

[bradgoodell]

@CarpetCollectionAU Thank you.  

People sometimes have the impression that Etsy is doing this to them in a malicious or uncaring manner.  Instead, Etsy is following the law and protecting themselves and the sellers from potential fines and legal action.  What is a minor mistake in the buyer's eyes may actually be a major liability to both Etsy and the seller.  

[CarpetCollectionAU]

@bradgoodell Exactly. Instead of looking for the reasons why things are happening, many just assume Etsy is "money grabbing" without concern for Sellers. But the exact opposite is the case. 

Now, the way Etsy explains things is an entirely different thing. But this is nothing new to those of us who have had to spend hours trawling through the Legal and Help Center information to reach an understanding of changes. Just go back to SSP / Reserves / PPP etc to see all the discussion here until we reached an understanding.

[bradgoodell]

This article may help with understanding the issue:  https://www.evidentid.com/resources/collect-and-verify-information-under-the-inform-consumers-act/#:....

Here is that part that discusses Etsy's legal requirements, and may explain why they refund sales if the information isn't verified in a timely manner:

Avoiding Legal Risks

Online marketplaces that fail to comply with the INFORM Consumers Act may face stiff penalties of $50,120 per violation. For that reason, it’s imperative to implement robust data security measures, regular audits, and compliance checks to ensure the data of high-volume third-party sellers is collected securely and properly validated.

If a seller’s information is inaccurate, it may lead to customer disputes that harm the seller’s and the online marketplace’s reputation. 

Impact on Online Marketplaces

The INFORM Consumers Act stands to upend some of the traditional business processes used by online marketplaces. It is essential that staff understand the intricacies of the new law and how it impacts their responsibilities. Training staff on the rules of the INFORM Consumers Act can educate them on the importance of due diligence when dealing with high-volume third-party sellers.

Keep in mind that compliance with the INFORM Act isn’t a one-time deal. Online marketplaces must engage in continuous monitoring to keep high-volume third-party seller information and contact details current.

--------------

This is not in defense of Etsy, but rather pointing out this not providing the information requested puts Etsy at serious risk.  If you haven't verified your identity as required by law, your sales are illegal.  Etsy may feel refunding monies when a seller is not in compliance is a better choice than being fined for illegal sales. 

Here is the Federal Trade Commision's take on it, from their website:  https://www.ftc.gov/business-guidance/resources/what-third-party-sellers-need-know-about-inform-cons...

Consequences for violating the INFORM Consumers Act

The cost of not complying with the INFORM Consumers Act can be high both for online marketplaces and for your business. For example, if online marketplaces don’t get required information from high-volume third party sellers, fail to verify it and update it, or fail to make necessary disclosures, the online marketplace faces civil penalties of $50,120 per violation of the law. Both the FTC and states have authority to enforce the INFORM Consumers Act.

Furthermore, the law requires online marketplaces to suspend a high-volume third party seller if the seller doesn’t provide the marketplace with the information the marketplace needs to comply with the law within 10 days or doesn’t respond within 10 days to the marketplace’s request for updated information. As the law specifies, the marketplace must give the seller written or electronic notice of non-compliance. If the seller doesn’t provide the information within 10 days of that notice, the marketplace must “suspend any future sales activity” of the seller until the seller complies with the requirements of the law. Online marketplaces also may have to suspend high volume third-party sellers if they make false statements in an effort to qualify for the limited exception for businesses that operate only out of a person’s home or if the seller doesn’t respond to consumers within a “reasonable time frame.”

That isn't what anyone wants to hear, sorry.  I view this as an opportunity for all of us to understand a law that could have real consequences to our businesses.

[EccentricHandbags]

I gotta ask then, why do they state that they will only refund pending orders? 

[CarpetCollectionAU]

@EccentricHandbags As cases like the OP's are still relatively new, we are learning from reports and discussion here about how Etsy is handling its' obligations under the INFORM Act.

I suspect that clumsy  / ambiguous use of terminology is the cause of confusion.

What is a "pending" Order anyway? Is it an Order that has been paid for but not dispatched? Is it an Order that has been paid for and dispatched but the funds were "held"? Is it a "not paid" Order?

Actually, I have never really considered any Order to be "pending".

Now, if we use the term "pending" in relation to finances, then deposits can be "pending" either due to deposit schedule or reserves / holds.

So, if we think of "pending orders" in terms of finance, the "pending orders" referred to in the notification most probably means the funds pending  from orders.

We still need to know why there was money from 60 days back still in the account/s. Until someone advises otherwise, I can only assume that there was a "hold" on deposits which was implemented when the 60 day notice was given. If this is the case, then these funds were pending and available for deposit or refund. I really cannot see Etsy refunding 60 day retrospectively from their own pocket

So  basicially I think when the Sellers saw the word "pending" they thought one thing but when Etsy used the word "pending" it had an entirely different application.

I still do not really understand what is a "pending order as an Order is either Paid or Not Paid. If it has been paid it is either Sent or Not Sent.

[EccentricHandbags]

@CarpetCollectionAU  I think you have been reading something wrong the whole time.  Where does the OP say that money was being held?  She doesn't.   She only says that Etsy refunded orders that were completed.  That means sent out to customers.  You are assuming something that I believe is not the case.  Where does she say Etsy was holding her money?  

Pending means waiting for payment to be processed. So in other words, Etsy would cancel any order that came in  and payment would not be processed.  That word is not as ambiguous as you want to believe it is. 

[CarpetCollectionAU]

@EccentricHandbags Actually, I said in the above post that I was assuming that funds had been held because, if not, where did the money for the refunds come from. " I can only assume that there was a "hold" on deposits which was implemented when the 60 day notice was given"

If funds were "pending" there would be no money to refund.

I really do not wish to engage in a debate here.

I am only offering a possible interpretation of the circumstances which fits the scenario and explains why Etsy is refunding retrospectively for 60 days.

Perhaps the OP could return and advise if these funds were "held" or if Etsy refunded from their own pocket because these are the only 2 possibilities?

Many commenting here have one interpretation of what Etsy means by "pending sale", I have a different one. 

[EccentricHandbags]

@CarpetCollectionAU   Etsy does not have to hold funds in order to refund from the seller.  That is why we are required to have a credit card on file.  There is no reason to assume that her funds were held in a reserve. 

A pending order is an order waiting for payment to be processed.  A decision is made by Etsys payment processing and then it is either paid or not paid.  It is really very clear what pending is.

[bradgoodell]

@EccentricHandbags 

What Etsy said, and how and why it was said is currently irrelevant. None of us know what exactly Etsy said except the OP and Etsy, and none of us can interpret what Etsy meant.  

Etsy gave her 60 days to legally confirm her identification.  She failed to do so.  This is terribly unfortunate for everyone involved.

There are people currently offering $200 to get someone else to open an Etsy shop for them.  These people are obviously doing it because they cannot open a legal Etsy shop themselves.  Etsy doesn't know if the person behind the screen is the legitimate owner or someone who hacked a dormant shop or someone who paid someone else.  

Legally, Etsy is required to verify who the seller is.  If the seller cannot verify their ID, Etsy has every reason to protect themselves and avoid that $50,120 fine.  I can only assume Etsy refunds all orders made in those 60 days as a show of good faith, rather than keeping monies that could have been obtained illegally.  

Your question, no one can answer except Etsy.

[EccentricHandbags]

What Etsy says isn't irrelevant.  It is their site and they are responsible if they are misleading people.  Only pending orders should mean just that.

[bradgoodell]

@EccentricHandbags As I said:

None of us know what exactly Etsy said except the OP and Etsy, and none of us can interpret what Etsy meant.  

What I do know is sellers need to take this seriously, and not procrastinate.  

I am quoting the Federal Trade Commission now:

"That means the INFORM Consumers Act impacts you if you sell consumer products in an online marketplace, if you meet the minimum sales thresholds in the law, and if you don’t meet all the factors required for an exemption. Furthermore, marketplaces can implement measures on collection, verification, and disclosure that go beyond what the Act requires. The Act specifies a floor, not a ceiling, on what marketplaces must do."