D., a carpenter and Etsy seller of several years, recently sold a piece of custom, made-to-order furniture for around $150. The sale itself was business as usual for their shop — but it came with a sense of exasperation. Their earnings would be tied up for weeks while bills, rent, and expenses pile up.

Since late June, Etsy has had D.’s account under restrictive settings, putting a hold on the bulk of money that’s coming in as customers place orders. In D.’s case, 75 percent of earnings from a $150 order, as an example, are being held by Etsy — in what’s known as a “payment reserve” — for anywhere between two weeks and 45 days. After Etsy fees, taxes, and other expenses are pulled from the remaining 25 percent D. has access to, they’re only left with around $13.

“I’m in stress mode right now,” D. says. “I wake up at 4 in the morning, and I’m sitting in bed thinking about this.”

D., who asked that The Verge not identify them for fear of retaliation, is far from alone. A moderator of the r/EtsySellers subreddit says the group has seen a surge in questions about shops being placed on reserve. Chiarra Lohr, secretary-treasurer of the Indie Sellers Guild, which represents artisans, including Etsy sellers, says the organization has heard from dozens of longtime sellers who’ve had their accounts placed on reserve in recent months. And in late May, the chorus of questions about payment reserves grew loud enough that Etsy felt compelled to respond publicly, posting a short message about the system.

According to Etsy’s terms of service, placing accounts on reserve is meant to protect buyers and make sure sellers are able to keep up with the flow of orders — the idea appears to be that it will push sellers to work through their backlog and ship purchases so that their full funds are released to them. Shops might have a reserve placed on their account if they just started selling on the marketplace, got an influx of orders, or if orders are consistently shipped without tracking.

An r/EtsySellers moderator told The Verge that they’ve observed that most reserve cases stemmed from orders being shipped without tracking information. They also pointed to buyers being scammed by new shops that pop up, take an order, and delete their storefront. Reserves mitigate this problem by keeping customers’ money in Etsy’s hands so that if problems arise, it can be returned quickly. If scammers can’t access the funds for a set period of time, it could disincentivize this kind of fraud. (Etsy didn’t respond to specific questions about whether recent reserves are connected to this.)

But sellers like D. say Etsy is applying reserves to longtime shops in good standing, and they’ve been unable to get answers from Etsy about why their money is being held. D. says their shop hasn’t had an influx of orders or refunds, and out of hundreds of orders this year, just one was shipped without tracking. More than $3,000 of D.’s earnings are held in reserve, according to a screenshot they shared — they have access to about 1 percent of that after fees, taxes, and other costs are deducted. 

The shift in how they’re paid has been stressful for D. and other sellers who are making custom products that take longer to produce and mail out.

“When I ship those orders, I get [that $3,000]. But because my items are made to order, I need the cash flow,” D. says. “I pay my rent, I pay my groceries, I live on the money from Etsy. And so $3,000 that I would have otherwise had here, just five days before rent is due, I don’t have.”

Many Etsy sellers live “hand to mouth,” as D. puts it — though they might stock premade products in their shop, they often use money from a sale to purchase materials for that order. Lead time for orders from D.’s shop is about two weeks; in the meantime, they’re forced to dip into savings and credit to fund their business and personal expenses.

Less than 2 percent of shops currently have a payment reserve placed on their accounts, and for most of those shops, the amount being held is less than $50, says Chirag Patel, head of payments at Etsy. The company says that, on average, funds on reserve are released to sellers within two weeks.

“In some cases, we will delay a portion of funds from a sale until we can confirm that the order has shipped. This enables us to continue paying sellers in a timely manner while taking the steps necessary to help keep our marketplace safe and protect our customers when there are unexpected issues with their order,” Patel told The Verge via email.

Though reserves are affecting just a fraction of the total sellers on Etsy, those who are subject to the rules can struggle to maintain their business with the delayed cash flow. Another seller, Y., had a payment reserve placed on their account in mid-May without any prior warning. Y., a metalsmith making high-quality custom jewelry, has completed tens of thousands of sales and maintains a high customer rating. (Y. also requested anonymity, fearing retaliation for speaking out.)

At times, Y.’s orders were late to ship out, and they acknowledge that the payment reserve on their account may be due to that. Their focus, though, has been on delivering the best to their customers by making custom prototypes and testing products before sending them out. The unexpected hold on a large portion of their earnings means that their business, ironically, has become less stable than it was. 

Y. uses precious metals in their work, like gold, and prices custom items for customers based on the price of gold that day. When their account wasn’t under reserve, the roughly five-day difference between when they purchased materials to when the money was transferred to them was manageable; now, that difference can stretch to two weeks or more. Y. says the delay in payments has forced them to reduce restocks, and they’re unable to keep as much inventory. They’re also declining high-value custom work.

“It’s incredibly frustrating for both me and my customers who desperately want me to restock stuff,” Y. says.

Though the reserve system might block scammers from running off with customers’ money, it’s created a situation that can quickly spiral for legitimate sellers who don’t have funds stockpiled to cover operating costs. The system is more complicated than Etsy, holding 75 percent of the total amount a buyer paid.

Each time a sale is made, a seller’s reserve minimum — that 75 percent portion of the sale — goes up accordingly, creating a running count that a seller must meet. If a seller buys a shipping label, pays for Etsy ads, or otherwise zeroes out the 25 percent portion that’s available to them, the remaining balance is pulled from the 75 percent set aside. Subsequent profit from sales first goes toward replenishing the reserve minimum before money is available to be deposited into a seller’s own account.

“I had to take a personal loan to pay people for the first few weeks, because I had just restocked and it was a complete surprise to suddenly be getting zero dollars from my payment account,” Y. told The Verge via text message.

Y. says they’re not upset by the payment reserve system on the marketplace — the most disruptive part is the way Etsy has designed it. They point to the role Etsy has played in providing job flexibility to them and to other disabled artisans and small sellers that increasingly feels distant. Indie artisans have long complained that it’s becoming harder and harder to support themselves via Etsy sales as the company has relaxed rules around the definition of handmade, increased fees, and pushed sellers to offer services like tracked shipping and around-the-clock customer service.  

One way some sellers have been told they can avoid reserves is to meet the Star Seller program requirements, a designation given by Etsy that rewards shops that meet shipping and customer service benchmarks. 

But for some Etsy shops, responding to messages within 24 hours and shipping according to Etsy’s requirements isn’t feasible. Lohr of the Indie Sellers Guild says the group heard from a baked goods seller, for instance, who ships orders right before a customer’s event. But customers might place orders months in advance, and Etsy’s processing time only stretches to up to 10 weeks.

“She’s doing what is best for her customers and her business, but in the Etsy system, it’s showing that she has late orders that haven’t been processed,” Lohr says. The Indie Sellers Guild recently started a petition imploring Etsy to work with sellers who are affected by reserves.

D., the custom furniture seller, is desperately trying to hit Star Seller status so that their reserve might be lifted in August. Orders must ship on time, and customer messages must be returned within 24 hours. D. considers themselves lucky — they can operate a smartphone at lightning speed and quickly communicate with customers. But not every person reliant on Etsy is in that position.

“There are people out there who are not digital natives, who are not native English speakers, who are older, who are really making a living on this,” D. says. “I have all those things going for me, and [if] it’s still hard for me, it is just 10 times harder for anybody who can’t navigate these systems successfully.”