Offsite Ad Fee

[WanderingSilverbacks]

Similar question: 

First; frustrated that Etsy opt'ed me into Offsite Ads without my permission. 

I have an item for sale that sells for $10. 

Total transaction cost was $22.23.  

Etsy is taking $3.13 in Offsite Ads (15% of the $22.23).  

An Advertising Fee should be assessed only on the value of the item sold not on the shipping fee, transaction fee, or taxes. 

This math reduces a seller's margin not by 15% but by 31.3% in my example.  

How does this get disputed? 

[dayspringcollectible]

No dispute possible.  Fees on all sites are based on the order total to keep people from charging $1 for the item and $50 for the shipping.

[cutebutton]

If you have sold less than $10,000 which I'm assuming you have since you said it was 15% you can opt out of the ads.  Not sure how to do that because I can't opt out but someone may be able to tell you how.  Once you go over the $10,000 mark you can't opt out but it goes down to 10%.

[dayspringcollectible]

Close - 12%

[vintageNCtreasures]

@WanderingSilverbacks 
You were opted in OSA when you opened your shop.
Etsy didn't need your permission to be opted into OSA.

You can OPT out since you mention getting charged 15% in fees  which means you haven't made $10K in any 365 day period.

Shop manager > settings > offsite ads > follow the prompts to opt out.

There's nothing to dispute.
Have you looked at the other fees Etsy charges?
99.9% of online sites (eBay, Amazon, etc) charge you transaction and processing fees on the TOTAL of the order, including item price, shipping, taxes, etc.
OSA's also charge that 15% fee on the total of the order.

Plenty of info on the help pages about OSA and the fees for selling on Etsy.

[WanderingSilverbacks]

Stating how the fee is assessed and it being correct are two different points. 

There are very specific laws governing convenience fees, services fees and what defines each.  There are also laws that prohibit practices known as double-taxation which this fee could equate to.  I say "could" because that will be up to a tax lawyer familiar with NY tax laws to challenge. 

The concerns this raises for me as a seller are: 

1. Sales Tax, Postage, Processing fees are not revenue: It’s not part of the seller’s revenue, so charging a fee on it seems inappropriate.
2. Legal and Compliance: As I said above, many states have strict laws prohibiting fees from being assessed on sales tax. 
3. Reduced Margins: To the point of my original post - Sellers are effectively paying Etsy a percentage of funds that we never truly "earn."

Back to my main point - this makes it even harder to maintain reasonable profit margins, especially for low-margin items.

[dayspringcollectible]

You can disagree all you want.  Do you think Etsy, as a major corporation, hasn't looked into every detail of this and their lawyers crossed every "T" and dotted every "I"?

It's up to you to know the fees you are subject to and make sure you are charging enough to have the margins you need.  If you aren't, that's on you.  That's not Etsy's fault. We all have products we don't sell because the market won't support the margins we need.  So we move on to products that do.

And if you can't make a profit here, you probably should quit selling online.  Etsy has the lowest fees of all the major players.  You might be able to find some small venues that have lower fees, but they won't provide you with the traffic you need for sales.

[bradgoodell]

@WanderingSilverbacks 

Every dollar you collect is revenue.  That is how it will be reported to the IRS on your 1099.  

Etsy collects and remits sales tax, so it is not included on your 1099.

But if you charge for shipping, it is revenue and is included in your 1099.  When you fill out the IRS schedule C you put all revenue as income.  

Then fees, postage, refunds, etc are all deductions.  

There is no "double taxation" as Etsy isn't taxing you.  They are charging fees for services.  

ALL brick and mortar stores that charge sales tax and accept credit cards get charged credit card processing fees on the sales tax amount, because it is a service.  

The federal government will even charge you a fee if you pay your tax bill online with a credit card, rather than a bank transfer.  You can read all about those fees the the IRS website:  https://www.irs.gov/payments/pay-your-taxes-by-debit-or-credit-card

So please don't claim something is illegal when it clearly isn't.  

[OmasFabricStash]

I don’t think the law will work if you have joined Etsy. Once you sign the paper work when you join you basically gave Etsy permission to do whatever they want with your shop. 

[LeParisMetro]

Which states have laws against assessing fees on sales tax?  All credit card processing companies assess a processing fee on the total transaction to the shop owner which includes sales tax in brick and mortar stores everywhere. Which states say this is illegal?  California does not and if any state would it would be that one….

[PillowDetails]

Yes, it definitely takes a bigger chunk out of lower cost items, due to the fee being assessed on the order total.  I don't like it, and I've never been able to opt out, since the program's inception.  It's underhanded to have new shops opted in, without any clear indication - other than reading all the fine print in the handbook.  Gotcha!  It's truly a hidden fee.  At least you can opt out - read up about the 30-day rule.

[DaysofYoreTreasures]

@PillowDetails 

"It's underhanded to have new shops opted in, without any clear indication"

Well said! I agree 100%.

[WanderingSilverbacks · Accepted solution]

dayspringcollectible  - You clearly aren't too familiar with corporate practices as a whole.  They tend to operate under the position of gray the line until someone big enough says otherwise, then apologize and correct.  If they didn't, tax laws and the various machinations in place to penalize them wouldn't exist. You also seem to be operating under the impression everyone on Esty is just a SMB owner trying to carve out a small profit and doesn't do something else for a living.  

Noted - as a community member your position is suck it up and deal with it. Lovely attitude. 

[dayspringcollectible]

You really like to jump to conclusions, don't you.  MOST of the sellers on Etsy have jobs elsewhere.  On a percentage basis, very few are full-time here alone.  And I know corporations like to gray the lines.  But after several years now of people complaining about off-site ads, no one has been able to challenge etsy's stand yet.

You're obviously another of those we get every now and then who must have read a questionable article somewhere and now is a lawyer wannabe.  The solution is simple.  If you are so sure Etsy is doing something they can't, file a class action lawsuit and prove your point.  That should be interesting.

[LeParisMetro]

As someone who has had leadership positions in corporations for over 35 years, my position is that Etsy is operating a business and set their rules. Sellers as businesses, whether small or large, assess whether these rules work for them. If they do, the seller makes a business decision to operate on Etsy within their rules. If the rules don’t work for the seller, they go somewhere else.  There are a lot of other options for online selling. But since the other online selling platforms operate the same way as Etsy on this, you would have the same issue on those.

[leilahamaya]

yes i consider this to be the fee on the fee. etsy should not charge the fee to tax, shipping or to its own fees.

people will think that its 12% or 15% regular fees plus 9.5...it is not, it doesnt add up that way.

and even assume that is that way, throwing off their profit margin calculations. but because of what you say - the fee applied to tax, the fee applied to etsys fees -- makes it more than 12% or 15% + 9.5 %

because of the fee on the fee. so its actually - convoluted - 15% + 9.5 % + .45 cents + 15% of 9.5 % +.45 cents fixed

plus 15% of the tax + 15% of shipping.

my perspective - i hate the offsite ads, and i am someone who is locked into them. i truly believe they are unlawful, to be forced into them without clear consent, without knowing when it will strike- and especially the trap laid out for newbies, being opted in by default.

really if etsy understood how much hatred they sell me every time they take the cut, they would not consider it worth it.

[Mannydecor]

I've had to put my shop on holiday mode as the ombudsman is now involved with this offside Ad ,  I'm a small furniture maker in London uk, customer bought a bar unit for £910 with etsy fee and offsite Ad  ETSY took £226. All my items are made from scratch,  I did not opt for this offsite Ad so I cancelled the order as I won't be making much from it after I buy materials and shipping cost as the item is a large unit, 

I've now got the ombudsman involved I was told is a breach of contract on the common law for charging me the £81 for offsite Ad and I can claim for damages for putting my shop on hold as any sale made will be charged either the same or even more just on Ad 

I suggest you contact the ombudsman and state your case because etsy are extorting us,  

I have tried to refund £684 etsy paid in my account out of £910 but they want me to pay back the full £910 to the buyer and I'll be out of pocket

Basically I can't even refund the buyer  so the case is now getting dealt with the ombudsman  so I advice you do the same , etsy use to be good but now is just extort money of use and the current customer service is DIABOLICAL  JUST A WASE OF SPACE

[BagmakerSupply]

@Mannydecor: "... and I'll be out of pocket" Why do you think this? If you 100% refund and cancel an order Etsy will credit you all the fees and it should be a net zero situation.

[vintageNCtreasures]

@Mannydecor 
As for offsite ads if you haven't made $10K (don't know what the UK equivalent is) in any 365 period, you can OPT out of offsite ads.
Settings > off site ads > follow the prompts.

You will NOT be out of pocket when you cancel/refund in full. You get all your money refunded along with the fees.

You can't keep part of the buyers money if you're not going to honor the sale. The buyer could open a case against you and win. You have to refund in FULL since you're in the UK.

You CAN cancel/refund the buyer and you won't be out of pocket.

Lots of info on the help pages about cancelling/refunds.
How to Issue a Full or Partial Refund For an Order – Etsy Help

How do I pay for a refund?

If you use Etsy Payments, the funds for the refund are deducted from your Payment account. If your Payment account doesn’t have enough funds to cover the refund, your credit card on file will be charged for the remaining amount.

Will Etsy refund my seller fees?

If you refund a buyer through your Shop Manager, your Etsy transaction and processing fees for the refunded transactions are automatically refunded to your Payment account. If you also canceled the transaction, your listing fees are automatically credited to your account.

[CatsWhiskersCurios]

"I have tried to refund £684 etsy paid in my account out of £910 but they want me to pay back the full £910 to the buyer and I'll be out of pocket"

Well of course Etsy expects you to pay back the full amount straight away - the buyer is entitled to have every penny returned as you decided not to honour the transaction. If you haven't read up on Etsy's fee structure, that's on you, and a customer should never be a pawn in your disputes with Etsy. It's not extortion, it's part of what you signed up to when you joined Etsy. You don't have to like it, but you can't cry foul when you didn't read the small print. 

[TreeSeedMan]

 I don’t think anyone would be more upset than I should be with offsite ad fees as it is almost $1000 I have in offsite ad fees already this year **(It is January btw)**. My pricing structure was not set up to have these fees and this cost is very upsetting that this is required.  There should be a limit on how much can be charged for offsite at Etsy charges of dollars but they pay pennies to operate that’s just wrong

[bradgoodell]

@TreeSeedMan There is a limit.  If I remember correctly, it is $100 max per sale.  So if you sell a $1500 painting or a $3000 sofa, the fee will stay at $100.  

Unfortunately for you, you are selling very low cost products, so you will likely never reach that limit in one sale.  If you are getting that many sales from off-site ads, drop the sale you currently have in your shop and nudge your prices up to cover the fees.

Best of luck.

[BagmakerSupply]

@TreeSeedMan: Totally understand and share your frustration with how the Offsite Ads program is implemented, but in theory, at least, you would not have received any of those orders without the Offsite Ads.

Unless all of your sales come from Offsite Ads, you need to calculate what percentage of total revenue the ad fees are and as @bradgoodell suggested adjust prices accordingly. For us, last year Offsite Ad fees were less than 1/2 of 1 percent.

[dayspringcollectible]

@bradgoodell 

Yes, $100 limit per item.

@TreeSeedMan 

You are charging too little for your seeds.  I sell garlic bulbils (seeds) in season.  I had them priced at $7.99 per 100, shipping included, which at the time was about $4 for the seeds and $4 for the shipping (1 oz).  I added $1 to that when off-site ads kicked in, raising the price to $8.99  and it didn't slow sales in the least.  Postage has gone up a bit since then, so now I might charge another 50c or so.

Raise your price $1.00 and your customers will be paying the entire cost and more of the off-site ads for you...nothing out of your own pocket!

[Mannydecor]

I've made over £10k

But what if I set my ad limit myself , I guess etsy will still charge me regardless of setting my own AD limit, so is extortion and I've been automatically opted in the offsite Ad , I got charged £81 for offsite AD fee for one sale