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Etsy, the global online marketplace used by millions, is facing claims from sellers it has been withholding thousands of pounds from small businesses by imposing reserves on accounts that take 75% of sellers’ income for 45 days with no warning.

Sellers say the company is retaining their income with little care for how it will affect families in a cost of living crisis.

Pietra (her surname is not used for fear Etsy will shut her account), a Miami-based Etsy seller, told Sky News she has more than $20,000 (£15,463) held in two of her accounts in an enforced reserve that she is unable to access.

Dan Vass from Aylesbury runs a furniture business through Etsy which was going from strength to strength until a reserve was imposed on his account on June 14 without any warning. "We currently have over £5,000 in reserve and it just seems to keep growing. We haven't been able to pay bills and this is our only source of income," he said.
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Dan Vass from Aylesbury runs a furniture business through Etsy

Since 2015 she has designed wedding favours to sell on the platform full-time, balancing work with being a single mum.

Her business was taking in more than $30,000 (£23,195) per month in orders. From that total, once production and shipping costs are removed, she is left with $8,000 (£6,185) profit.

But after a reserve was placed on her account on May 18, she saw her income drop to just $444 (£343) in June.

“It’s insane that in a two-month period my whole life went to hell because of this,” she said. “They’re holding $20,000 (£15,000) of mine, and I basically can’t buy food.

“I’ve just reached two months of my rent being late and I’ve maxed out two credit cards, one for $5,000 (£3,800) the other for $6,000 (£4,600). It’s been close to impossible to get out of bed.”

Dan Vass from Aylesbury runs a furniture business through Etsy which was going from strength to strength until a reserve was imposed on his account on June 14 without any warning.
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Mr Vass says his business was going from strength to strength until a reserve was imposed on his account

‘We haven’t been able to pay bills’

Dan Vass, from Aylesbury in Buckinghamshire, runs a furniture business through Etsy which was going from strength to strength until a reserve was imposed on his account on June 14 without any warning.

“We currently have over £5,000 in reserve and it just seems to keep growing. We haven’t been able to pay bills and this is our only source of income.

“There have been times this month when we literally do not know how we can keep the business going and our family fed because the items take a long time to make, have high material costs and Etsy are holding all of our funds, so we can’t actually begin to make them when orders come in.”

Dan Vass from Aylesbury runs a furniture business through Etsy which was going from strength to strength until a reserve was imposed on his account on June 14 without any warning. "We currently have over £5,000 in reserve and it just seems to keep growing. We haven't been able to pay bills and this is our only source of income," he said.
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Mr Vass says he has around £5,000 in reserve with Etsy

‘I’ve had to retrain’

Anthony Whitworth, from Tadcaster in North Yorkshire, owns Etsy shop The Bizzy Box and is ranked in the UK’s top three Etsy sellers.

He’s been running a thriving business for seven years through the online marketplace which has enabled him to make a good living whilst supporting his wife who has Multiple Sclerosis.

His business pays Etsy over £35,000 in fees per year and has a 5-star rating from more than 63,500 sales, but since May his account has been put into reserve swallowing his income.

“I’ve had to retrain as a locksmith just to make enough money to keep things ticking over since May and in case Etsy goes seriously downhill in the long run.”

‘Quite shocking’

The Small Business Commissioner Liz Barclay told Sky News that over the past few months she has received a rising number of complaints from small business owners that online platforms are holding their money in reserves for a longer period of time than they previously did.

“Up until now, we have been hearing of online platforms withholding smaller amounts of money. This is the first time I’ve heard 75% being withheld in reserves and that is quite shocking.”

Dan Vass from Aylesbury runs a furniture business through Etsy which was going from strength to strength until a reserve was imposed on his account on June 14 without any warning.
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Etsy has a “purchase protection programme” which enables a customer to easily apply for a refund

“These small suppliers are the lifeblood and the talent that drives your business success. They need to be paid as quickly as possible or they may go to the wall.”

Ms Barclay said the government has no jurisdiction over online selling platforms such as Etsy, which are not UK companies.

She said the government is reviewing the tools it has to help small businesses get paid faster with a report expected to be published in Autumn.

Read more from Sky News:
Amazon to cut 9,000 jobs in its cloud services
Thousands of small businesses face ‘tough decisions’

An Etsy spokesperson said: “Etsy Purchase Protection is designed to protect both buyers and sellers as Etsy covers the cost of refunds for all eligible orders; since launching last year, we have received positive feedback around this program.

“And while we understand that payment reserves can cause short-term disruptions to a seller’s payment schedule, these temporary holds are common practice across marketplaces.”

‘I’m worried I’ll lose lots of sales’

Sky News understands Etsy began using payment reserves in 2021.

Reserves are not uncommon amongst seller platforms.

Sellers who have been on Amazon for over a year and have processed at least 100 orders will have 3% of their daily payments held in a reserve for the purpose of covering transaction disputes.

In comparison, Etsy sellers have shown evidence to Sky News that whilst in a “reserve”, 75% of the amount they receive from orders is unavailable to them for 45 days or until they have provided tracking proof.

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This means the money needed to pay for the product and ship it out is not received until after it is made and shipped.

A lot of sellers don’t want to force their customers to pay for tracked shipping because international tracking can rack up a huge cost.

Steen Ross, from Norwich, has £1,800 held in a reserve on her Etsy account.

She has sold custom costumes to a largely American customer base on Etsy for a decade and relies on her Etsy income to pay rent.

“Most of my sales go to America and about 90% of people don’t want to pay the additional cost of tracking because it’s so expensive, they are happy for me to just provide proof of postage.

“I’m worried that if I raise prices to include tracking, I’ll lose a lot of sales, but if I don’t Etsy won’t release funds from my reserve before 45 days.”

Etsy’s purchase protection programme

In June 2022, Etsy introduced a new “purchase protection programme” which enables a customer to easily apply for a refund if they claim their item is lost or stolen.

Since then, Pietra, Steen Ross and Dan Vass claim they have experienced no-challenge refunds, where funds appear to automatically leave their reserve when a claim is made.

These complaints have been echoed by hundreds of people online tweeting Etsy’s CEO John Silverman and a Facebook group ‘Etsy Reserve Strike’ has been set up in the last month to organise a strike amongst sellers.

Etsy has almost 90 million buyers worldwide and about 6 million sellers but last year, for the first time since 2012, Etsy experienced a fall in its number of users and sellers.

Mr Silverman has dropped $24.4m (£18.7m) of his shares in the company since the beginning of February.

As of 10 July, Etsy’s share price sat at $85.83 (£65.56) compared to the all-time high share price of $297 in 2021.

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Independent review to examine how govt department handled prosecutions of Post Office staff

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Independent review to examine how govt department handled prosecutions of Post Office staff

The Department for Work and Pensions will launch an independent review into its handling of prosecutions against Post Office staff, Sky News has learned.

About 100 prosecutions were carried out by the DWP between 2001 and 2006 during the Horizon IT scandal.

The “independent assurance review”, however, is yet to be commissioned and will not look at individual cases.

It comes more than a year after Sky News discovered joint investigations between the Post Office and the DWP during the scandal – leading to suggestions some may be “tainted”.

Hundreds of subpostmasters were wrongfully convicted of stealing by the Post Office between 1999 and 2015, due to the faulty Horizon IT system.

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What did we learn from the Post Office inquiry?

The DWP told Sky News they have “committed” to commissioning the review into prosecutions led by the department, where Post Office staff were investigated for “welfare-related fraud”.

They described cases as “complex investigations” which they said were “backed by evidence including filmed surveillance, stolen benefit books and witness statements”.

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They also added that “to date no documentation has been identified showing that Horizon data was essential to these prosecutions”.

The review will look at a period of time spanning 20 years covered by the Post Office (Horizon System) Offences Act 2024, from September 1996 to December 2018.

The Horizon Act was effectively blanket exoneration legislation which automatically quashed Post Office convictions but did not include DWP or Capture-related prosecutions.

Roger Allen
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Roger Allen

The family of Roger Allen, who was convicted in 2004 of stealing pension payments by the DWP and sentenced to six months in prison, are “frustrated” the review won’t look at his or other cases.

Mr Allen died in March last year, still trying to clear his name.

Keren Simpson, his daughter, describes the review as a “development” but a “fob off”.

“I think it’s just getting us off their backs,” she said, “I’ll believe it when I see it because they’re not taking any accountability.

“They’re not acknowledging anything. They’re denying everything.

“No one’s saying, look, we really need to dig in and have a look at all these cases to see if there’s the same pattern here.”

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‘Everyday life was a struggle’ – former sub-postmistress

Mr Allen pleaded guilty to spare his wife – after his lawyer told him in a letter that there had been “an indication from the Crown that they may discontinue the proceedings against Mrs Allen were you minded to plead guilty”.

Despite the Criminal Cases Review Commission deciding Mr Allen had grounds to appeal against his conviction, it was upheld by the Court of Appeal in 2021.

The independent review will look at the “methodology and processes” used by the DWP, and the “thoroughness and adequacy” of efforts to obtain case documents.

The DWP say that the review won’t be commenting on individual cases or those that have been dismissed by the Court of Appeal.

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Post Office: The lost ‘Capture’ files

Potential reviewers will also be approached with experience “outside of the civil service”.

They will be asked to produce a report with recommendations for any further actions within six months of starting their review.

Lawyer Neil Hudgell, instructed by some of those prosecuted, described the review as “wholly inadequate”, saying the DWP “should not be marking its own homework.”

“Any involvement in the process of appointing reviewers undermines all confidence in the independence of the process,” he added.

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‘All we want is her name cleared’

He also criticised the DWP’s statement as “strikingly defensive and closed minded”.

“It cannot be anything approaching rigorous or robust without a proper case by case review of all affected cases, including those dismissed by the Court of Appeal.”

He said that where hundreds of convictions were quashed “at the stroke of a pen” a proper and “targeted” review is “the least these poor victims are owed.”

“At the moment there is a widespread feeling among the group that they have been “left behind and that is both legally and morally wrong.”

A Freedom of Information request to the Department of Work and Pensions by Sky News has also found that most cases they prosecuted involved encashment of stolen benefit payment order books.

In response to questions over how many prosecutions involved guilty pleas with no trial, the DWP said the information had been destroyed “in accordance with departmental records management practices” and in line with data protection.

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Teenager guilty of murder of schoolboy Harvey Willgoose during lunch break

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Teenager guilty of murder of schoolboy Harvey Willgoose during lunch break

A 15-year-old boy has been found guilty of the murder of Sheffield schoolboy Harvey Willgoose.

Harvey, also 15, was killed by a fellow student outside their school cafeteria in February this year.

His parents, Mark and Caroline Willgoose, have told Sky News that school knife crime is “a way of life for kids”.

The defendant, who cannot be named for legal reasons, had brought a 13cm hunting knife with him into All Saints Catholic High School, Sheffield, stabbing Harvey twice in the chest just a few minutes into the lunch break.

The boy had previously admitted manslaughter but denied murder. He was found guilty by a jury on Friday.

Harvey and his father
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Harvey and his father

His defence told the court the defendant had “lost control”, stabbing Harvey after years of bullying and “an intense period of fear at school”.

Moments after stabbing Harvey, he told teachers, “you know I can’t control it” and “I’m not right in the head”.

Giving evidence, the boy told the court he had no recollection of the moment he killed Harvey, something the prosecution said was “a lie”.

They told the jury the schoolboy “wanted to show he was hard” and had become “obsessed” with weapons in the lead up to Harvey’s death, with photographs of him posing with knives found on his phone.

Chris Hartley, of the Crown Prosecution Service, expressed the organisation’s “huge sympathies” for Harvey’s family and friends.

“The CPS and South Yorkshire Police were able to prove that the defendant did not lose self-control but intended to deliberately attack 15-year-old Harvey,” he said in a statement after the verdict.

“We remind teenagers that there can be horrendous and serious consequences of carrying knives. It has been proven that if you carry these weapons, you are more likely to use them or be a victim of knife crime. You are putting yourself, other people and your future at risk. Please stop carrying knives and stop putting lives in danger.”

Harvey Willgoose and his mother
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Harvey Willgoose and his mother

Speaking to Sky News ahead of today’s verdict, Harvey’s mother, Caroline Willgoose, said she felt she had “led [her son] into the lion’s den”.

She said Harvey was a “school avoider” who had “anxiety” about going to school.

“We badgered Harvey into going to school but I don’t think people realise that there is a problem in all schools with knives,” says Mrs Willgoose.

“It’s a way of life now for kids, and it needs to stop.”

During the trial, it was revealed that the defendant had had previous violent outbursts at school, and, a few months before Harvey was stabbed, the school had called the police when the defendant’s mother contacted them to say she had found a weapon in her son’s bag at home.

Harvey’s parents told Sky News’ Katerina Vittozzi they feel that the school did not take previous knife-related incidents “seriously enough” and felt “100%” the outcome might have been different if they had.

The head of St Clare Catholic Multi Academy Trust – a group of schools including All Saints – also told Sky News Harvey’s death “was an unimaginable tragedy for all”.

Steve Davies said: “We think especially of Harvey’s family, loved ones and friends today. We cannot begin to imagine the immeasurable impact the loss of Harvey has had on them.

“Harvey was a much-loved, positive and outgoing pupil whose memory will be cherished by all who knew him. As a community, we have been devastated by his death, and we continue to think of him every day.”

He added: “Harvey’s death was an unimaginable tragedy for all, and one that understandably gives rise to a number of questions from his family and others.

“Now that the trial has finished, a number of investigations aimed at addressing and answering these questions will be able to proceed.

“We will engage fully and openly with them to help ensure every angle is considered and no key questions are left unresolved.”

Describing her son as “a character” who “never stopped smiling, never stopped singing”, Mrs Willgoose said she was now campaigning for “all schools and colleges” to use knife arches.

“I want people to go into schools and talk about the devastation of what knife crime does.”

In an emotional interview with Sky News’ Katerina Vittozzi, Mrs Willgoose said she felt her son was “put here for a reason” and “I can’t let go until I put things right for him”.

“There’s no winners when it comes to knife crime,” she said.

The defendant “has ruined his life, his parent have got an empty bed”, she added. “He’s got to live with this for the rest of his life.”

Harvey’s father, Mark Willgoose, said that his son had had “a short life, but a good life”.

“He crammed everything in, and you’ve just got to try and see the positives in that,” Mr Willgoose added.

“Whatever happens in court, it’ll never be justice. It’ll never be enough.

“I think we’ve just got to make sure Harvey’s death is not going to be in vain, and if whatever we do saves one life, then it’s been worth us doing it.”

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Why Rachel Reeves may want to rethink one of her pivotal policies

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Why Rachel Reeves may want to rethink one of her pivotal policies

What do we do about the non-doms? 

It’s a question more than a handful of people have been asking themselves at the Treasury lately.

Politics Hub: Follow latest updates

It had seemed simple enough. In her first budget as chancellor, Rachel Reeves promised a crackdown on the non-dom regime, which for the past 200 years has allowed residents to declare they are permanently domiciled in another country for tax purposes.

Under the scheme, non-doms, some of the richest people in the country, were not taxed on their foreign incomes.

Then that all changed.

Standing at the despatch box in October last year, the chancellor said: “I have always said that if you make Britain your home, you should pay your tax here. So today, I can confirm we will abolish the non-dom tax regime and remove the outdated concept of domicile from the tax system from April 2025.”

The hope was that the move would raise £3.8bn for the public purse. However, there are signs that the non-doms are leaving in such great numbers that the policy could end up costing the UK investment, jobs and, of course, the tax that the non-doms already pay on their UK earnings.

If the numbers don’t add up, this tax-raising policy could morph into an act of self-harm.

Rachel Reeves has plenty to ponder ahead of her next budget. File pic: Reuters
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Rachel Reeves has plenty to ponder ahead of her next budget. File pic: Reuters

With the budget already under strain, a poor calculation would be costly financially. The alternative, a U-turn, could be expensive for other reasons, eroding faith in a chancellor who has already been on a turbulent ride.

So, how worried should she be?

The data on the number of non-doms in the country is published with a considerable lag. So, it will be a while before we know the full impact of this policy.

However, there is much uncertainty about how this group will behave.

While the Office for Budget Responsibility forecast that the policy could generate £3.8bn for the government over the next five years, assuming between 12 and 25% of them leave, it admitted it lacked confidence in those numbers.

Worryingly for ministers, there are signs, especially in London, that the exodus could be greater.

Property sales

Analysis from the property company LonRes, shows there were 35.8% fewer transactions in May for properties in London’s most exclusive postcodes compared with a year earlier and 33.5% fewer than the pre-pandemic average.

Estate agents blame falling demand from non-dom buyers.

This comes as no surprise to Magda Wierzycka, a South African billionaire businesswoman, who runs an investment fund in London. She herself is threatening to leave the UK unless the government waters down its plans.

Magda Wierzycka, from Narwan nondom VT
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Magda Wierzycka, from Narwan nondom VT

“Non-doms are leaving, as we speak, and the problem with numbers is that the consequences will only become known in the next 12 to 18 months,” she said.

“But I have absolutely no doubt, based on people I know who have already left, that the consequences would be quite significant.

“It’s not just about the people who are leaving that everyone is focusing on. It’s also about the people who are not coming, people who would have come, set up businesses, created jobs, they’re not coming. They take one look at what has happened here, and they’re not coming.”

Lack of options for non-doms

But where will they go? Britain was unusual in offering such an attractive regime. Bar a few notable exceptions, such as Italy, most countries run residency-based tax systems, meaning people pay tax to the country in which they live.

This approach meant many non-doms escaped paying tax on their foreign income altogether because they didn’t live in those countries where they earned their foreign income.

In any case, widespread double taxation treaties mean people are generally not taxed twice, although they may have to pay the difference.

In one important sense, Magda is right. It could take a while before the consequences are fully known. There are few firm data points for us to draw conclusions from right now, but the past could be illustrative.

Read more on Sky News:
Reeves warned over tax rises
What is a wealth tax?

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Are taxes going to rise?

The non-dom regime has been through repeated reform. George Osborne changed the system back in 2017 to limit it to just 15 years. Then Jeremy Hunt announced the Tories would abolish the regime altogether in one of his final budgets.

Following the 2017 reforms there was an initial shock, but the numbers stabilised, falling just 5% after a few years. The data suggests there was an initial exodus of people who were probably considering leaving anyway, but those who remained – and then arrived – were intent on staying in the UK.

So, should the government look through the numbers and hold its nerve? Not necessarily.

Have Labour crossed a red line?

Stuart Adam, a senior economist at the Institute for Fiscal Studies, said the response could be far greater this time because of some key changes under Labour.

The government will no longer allow non-doms to protect money held in trusts, so 40% inheritance tax will be due on their estates. For many, that is a red line.

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‘Rachel Reeves would hate what you just said’

Mr Adam said: “The 2017 reform deliberately built in what you might call a loophole, a way to avoid paying a lot more tax through the use of existing offshore trusts. That was a route deliberately left open to enable many people to avoid the tax.

“So it’s not then surprising that they didn’t up sticks and leave. Part of the reform that was announced last year was actually not having that kind of gap in the system to enable people to avoid the tax using trusts, and therefore you might expect to see a bigger response to the kind of reforms we’ve seen announced now, but it also means we don’t have very much idea about how big a response to expect.”

With the public finances under considerable pressure, that will offer little comfort to a chancellor who is operating on the finest of margins.

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