Etsy sellers say their bank accounts were emptied in major billing snafu

Originally published at: https://boingboing.net/2019/02/17/etsy-sellers-say-their-bank-ac.html

Etsy hasn’t said how many sellers are affected, but there are hundreds of complaints in their seller forums.

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Charlie Foxtrot, big time.

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This has sellers concerned that their 2019 1099s will include the refunded amount.

1099s can be adjusted.

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That’s an impressive fuck-up. Why would they need to withdraw from customer accounts in the first place? I assume (perhaps correctly, perhaps not) that there’s a legitimate reason, but I’m having trouble seeing how you could withdraw that much money accidentally.

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This is what happens when the hand-crafted payment website you bought online turns out to be rhinestones hot-glued to a bundle of twigs.

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They can be adjusted but I am thinking any company lazy enough to try to fix things in this fashion is going to be too lazy to issue corrected 1099s without direct threats from the IRS (which is sometimes needed). This is going to be a nightmare that just keeps giving and might be worth a class action suit depending on how everything shakes out.

Also, I have a feeling that this might not have been a “bug”.

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I could see a scenario where an attacker has control over their billing infrastructure and generates these withdrawals to both provide cash to steal and the chaos necessary to conceal their theft temporarily.

At the same time, I don’t think we can rule out gross incompetence. As you say, any company lazy enough to try to fix things in this fashion is lazy enough to have truly awful QA.

Then again, it could be incompetent attackers–who’ve now potentially drawn attention to their ability to steal money from Etsy sellers.

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Just like the impound lot can release your car without a fee if the tow was improper. The intervening window of time and effort to make that happen is not free.

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Or a solid mixture of both.

In some ways I feel that the refusal to simply reverse the charges seems to point towards an attack rather than a bug. Etsy might be hoping to regain control of withdrawn funds before refunding them…and this technically buys them a few days. Hard to tell…but either way, it is a mess.

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One more reason why American bank routing is outrageous. In order to, say, pay my gas bill online I have to give you full, unfettered access to my bank account. Europeans may not believe this, but this is the only way to do bank transfers in our wretched, benighted kleptocratic backwater.

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Not entirely the same thing, but has anyone else been hearing about Pledge Music’s breakdown? I’m saddened because I’ve bought the majority of my music through them over the past 5 years.

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but instead an error related to a site change which affects a small group of sellers and is unrelated to buyers’ purchases.

They need to explain this in detail.

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They used to send a bill for things like listing fees and the final sale commissions … and were having a hard time collecting from some sellers.

So they switched to the linked account method.

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I’m thinking those that attached their accounts to credit cards had more protections. I’m not sure how to prevent this to an actual bank account, depending on your bank. You might be safest if you open a separate account, and literally keep no balance in there. Sometimes you can have protections against drawing below zero.

This is a huge fuck up, and I don’t get why they didn’t just refund the amounts immediately. To route payment through the Etsy payment system instead is an insult to injury. I mean, I had a restaurant double charge me. They immediately refunded it back to may card. Most establishments have a policy to refund the exact same way you pay. I don’t get what they were thinking.

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The fundamental issue is companies are still relying on the antiquated ACH system for banking transfers and using it for services it was never designed for. The ACH network is about 50 years old and was never designed for immediate money transfers for online payments.

Of course other countries are leading the way with newer systems like Immediate Payments that are designed for web-based transfers but it will be decades before the US adopts any of this.

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Thanks, that makes sense. You’d think they’d have some kind of safeguard on this, though.

ACH transfers are not easily reversed so I can see the logic that lead them to issuing credits instead. It’s actually faster in this circumstance. But it does create a number of other problems they’ll have to now deal with.

Think of an ACH transfer just like a wire transfer - once it’s done the money is gone. You can’t cancel or reverse it after the fact.*

(Not exactly the same as wires - there is an ACH reversal process but it can take a long time - up to 5 days)

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Try never, at least as long as the banks own our government. Also see: “broadband”.

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There are efforts underway but you’re right, the forces aligned against change and more so, just simple inertia means we’re stuck with what we have for a long time.

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Except that, at least in some of the cases, people’s credit cards were charged (one woman complains of a $4000 hit on her $3000 limit card). Is that doable through an ACH as well?