Etsy error resulted in large amounts being withdrawn from some sellers’ bank accounts and credit cards

An Etsy bill payment error resulted in large amounts of money being withdrawn from several sellers’ bank accounts and credit cards on Friday morning. While the company says the issue has been resolved and was not the result of fraud, the headache isn’t over for affected sellers because Monday is a federal holiday in the United States, and many financial institutions are closed.

Etsy sellers are required to have a valid credit or debit card on file with Etsy in order to have a payment account. Boing Boing reports that complaints first began emerging in Etsy’s Community Forums and Twitter on Friday morning, when sellers began noticing amounts ranging from hundreds to tens of thousands of dollars had ben withdrawn or charged to those accounts.

An Etsy representative posted with a brief message in its forum stating that the company was “aware of a bill payment error affecting a small group of sellers which resulted in some cards being incorrectly charged.” Then on Sunday afternoon, Etsy sent a longer explanation to sellers. The company said it has already refunded all incorrectly charged cards and will be sending deposits on Tuesday.

“An update on recent issues affecting payment accounts

On Friday, February 15, a bill payment error affected a small group of sellers which resulted in some cards being incorrectly charged. Sellers who were affected have been notified by email, or by Etsy Conversations, and the issue that caused this has since been resolved.

As part of fixing this issue, all incorrectly charged cards have been refunded. It may take several business days for the refunded amounts to clear and settle in card accounts.  Also related to fixing the root problem, some sellers saw their scheduled deposit of funds returned to Etsy on Friday, February 15, and those deposits will now be sent on Tuesday, February 19.

For affected sellers, we are very sorry for the trouble or concern this may have caused. Our first priority has been to correct the issue. This was not a fraud issue, but instead an error related to a site change which affects a small group of sellers and is unrelated to buyers’ purchases.

This is an issue we do not take lightly. We’ve assembled a Payments task force, including senior executives across Etsy, to address any concerns or troubles resulting from this error. We will refund any undue fees associated with this incorrect charge and change in deposit schedule. We don’t expect this error to impact additional sellers going forward.”

The explanation was not enough for many sellers, who said hourly updates should have been posted for a problem of this magnitude, and that Etsy had not addressed how it will compensate them for overdraft or late fees, or if the returned deposits will appear on their 1099s. TechCrunch has contacted Etsy for comment.