
Etsy sellers say their bank accounts were emptied in major billing snafu - mkeeter
https://boingboing.net/2019/02/17/etsy-sellers-say-their-bank-ac.html
======
dstola
The fact that this happened on a Friday with a Monday holiday coming up smells
extremely fishy to me.

Of course this is completely unfounded, but I have a gut feeling its a hack
and we will be hearing more about it in the future. Most electronic heists
happen at exactly these times because the banks will not reopen until
following Tuesday at which time it can potentially be way too late.

One prominent example that I can think off the top of my head is the
Bangladesh Bank Robbery [1], but I am sure there are more example to be found

[1]
[https://en.wikipedia.org/wiki/Bangladesh_Bank_robbery](https://en.wikipedia.org/wiki/Bangladesh_Bank_robbery)

~~~
astura
Here's another example

[https://krebsonsecurity.com/2018/07/hackers-breached-
virgini...](https://krebsonsecurity.com/2018/07/hackers-breached-virginia-
bank-twice-in-eight-months-stole-2-4m/)

>National Bank said the first breach began Saturday, May 28, 2016 and
continued through the following Monday. Normally, the bank would be open on a
Monday, but that particular Monday was Memorial Day, a federal holiday in the
United States. The hackers used hundreds of ATMs across North America to
dispense funds from customer accounts. All told, the perpetrators stole more
than $569,000 in that incident.

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kyrra
Things like this are my problem with the pull style payment systems. It would
be nice for online systems if you were given an invoice, and you had to tell
your bank to push the money to the other party. (or confirm the pull). For
recurring bills that are always under a certain amount, he was a customer can
give a business some limited amount they are allowed to pull every month.

In a system where we turn over our payment information to all these companies
and they can accidentally pull any kind of money from your account, it just
leads to problems.

~~~
millstone
privacy.com allows creating credit cards with preset spending limits, either
one-time or recurring. I use it for subscription services. (No affiliation
just a happy user.)

~~~
newnewpdro
Apparently Citi offers virtual credit cards to their users, I've been meaning
to open an account for this feature alone.

Are there any fees associated with that privacy.com service?

~~~
tokyodude
Capital One also does but apparently it requires you install a browser
extension that you give permission to spy on all webpages.

~~~
newnewpdro
Are you sure that's not just an optional convenience thing?

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remote_phone
The article is really poorly researched. They mentioned that Etsy decided “not
to cancel the transactions”. What does that even mean? You can’t cancel a
transaction where the money has already been taken out or the account and
magically expect it to return. Etsy has to push the money back into the
account via a refund.

And money refunded is never considered income, so the second part of the
article is completely unfounded speculation. Unless Etsy issued 1099s it
doesn’t matter how much money they push into the account, it doesn’t mean it
will be considered income.

~~~
seandougall
At least with Braintree (which my company uses), you can void a cc transaction
any time until it settles at midnight, with the result that the money never
actually leaves the account. A preauth of this magnitude could still cause big
problems for a day or so, but it’d be better than locking the money away as a
credit in a totally different account (which, among other problems, somehow
smacks of money laundering).

~~~
remote_phone
The money moved so it already settled.

~~~
seandougall
Yes, by the time they addressed it. Seems hard to imagine this was the sort of
thing that didn’t hit their radar on the day of, though.

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chx
This is the kind of mistake that potentially kills the company. Or would if it
still would be a small artist umbrella but it's now only a small portion.
Because after this, a lot of small artists will pull out for sure because as
you very well know 40% of Americans can't cover a $400 emergency expense so
they equally can't afford to hand their financial info to a company which
might just trigger such an expense. This is a problem. I liked the small
artist half of etsy. Where do you get your small artist stuff now?

In a way, Feltsewfantastic's Corgi felt keychain key ring / bag charm /
ornament is my support animal... etsy has brought me a lot of joy.

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llamataboot
I know that there has been a lot of internal handwringing at Etsy over changes
in the culture and values of the company over the past few years.

I imagine this will be a good chance to see how much of the old Etsy still
remains in the DNA and how much has gone CYA corporate.

Really hope everyone affected gets made whole. Unexpected large withdrawals
that persist for days can be extremely stressful, and in some cases, affect
lives for a long time afterwards.

\--

(I once had a case where a store charged me a ridiculous amount of times, over
40-50 for the same transaction, and then I was charged tons overdraft fees for
every duplicate transaction. The store refunded my money but refused to pay
for the overdraft fees, the bank refused to refund the overdraft fees
demanding the store would pay, and meanwhile I was a 19 year old out of
somewhere near $2000 for months and stonewalled by CorpStore and CorpBank.

(They eventually each agreed to cover half, which was a bit of a coup for the
bank I thought)

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ivanstojic
Mistakes happen, even terrible ones. They can be fixed though. The biggest
issue is the fact that Etsy is stonewalling the issue and not willing to talk
about it openly.

~~~
segmondy
I don't think they're stonewalling the issue. They need to figure out what
happened, they need to figure out who got affected, they need to figure out
how to refund their money, with ACH it's slow. Friday is the worst day, banks
are closed Sat, Sun and Mon (Banking holiday, President's day), their customer
service lines, emails are probably flooded. Their legal team might have
already taken a few calls, their PR department is working as hard as possible,
their retention team is also trying hard to keep business. The dev team needs
to also find a solution. They need to do all this, and their postmortem report
probably needs to be reviewed by legal to reduce any future exposure.

Nothing will make the users happy till their money is refunded and that will
not happen till Wednesday. Earliest day they can submit refunds will be
Tuesday, it will show up on Wed. Same day ACH is not going into effect till
Sep 2020.

~~~
pbhjpbhj
The whole concept of a bank being "closed" and so you being unable to make a
money transfer seems so quaint and last-millennium.

~~~
Fjolsvith
Exactly. This is one of the advantages that cryptocurrency has over banks.

The Etsy snafu will be repeated until people and businesses start to require
crypto for business transactions.

~~~
ceejayoz
> Exactly. This is one of the advantages that cryptocurrency has over banks.

If it were any sort of _meaningful_ advantage you'd likely see banks adapting
pretty rapidly. There's nothing inherently impossible about faster bank
transfers - Europe already has 24/7 nearly-instant transfers via SEPA.

> The Etsy snafu will be repeated until people and businesses start to require
> crypto for business transactions.

I suspect for every _one_ Etsy snafu there's a _bunch_ of "thank goodness I
could issue a chargeback" situations.

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zAy0LfpBZLC8mAC
It's strange how the US just can't seem to figure out sensible payment
systems. Payment in the eurozone is not exactly perfect, banks being banks and
all that, but this kind of thing is almost a non-problem: If there is a SEPA
direct debit drawn from your account that you object you, you simply tell your
bank (online banks tend to have the option in the online banking interface for
every direct debit transaction) and the amount is immediately credited back to
your account, with the same value date as the previous debit. It's then the
problem for the payee and their bank to sort out.

~~~
segmondy
It's already figured out, USA has the first mover's disadvantage, maintaining
compatibility with an older system when you have many users.

~~~
mschuster91
So what? The SEPA shift was also a compat nightmare - even worse than in the
US I'd say. 34 countries with each having their own system of bank and account
IDs that all had to be rolled over into one common system, and banks now being
allowed only one day of delay (which used to be up to a week for
international).

The EEA covers over 500M people, way more than the US does, with way more
languages. It's not impossible to do such a migration, the difference is that
EU legislators were fed up with the brokenness and _forced_ the migration via
regulation while the US government believes that "the market will fix
everything". No it will not, the market will only deliver what is the lowest
acceptable effort.

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code_duck
This is just their billing system, not the way sellers are paid?

I was very active in the Etsy community back when they start planning to
implement their own payment system. At the time, I perceived them to have a
record of continual incompetence paired with insensitive or hostile customer
service. I was very wary, along with friends of mine in the community, of
something such as this occurring to me. I certainly have never trusted them
with my money.

The response is typical of the vague, downplaying way I remember them handling
problems way back in 2008.

“We're aware of a bill payment error affecting a small group of sellers which
resulted in some cards being incorrectly charged. We don't expect this error
to impact additional sellers going forward.”

------
pmoriarty
_" People who sell crafts and other goods on Etsy, an e-commerce site focused
on handmade and small-batch products, say they woke up to a nasty surprise
Friday morning when thousands of dollars were withdrawn from the bank accounts
and credit cards sellers are required to have on file in order to have an Etsy
storefront."_

Why do sellers have to have credit cards on file?

Buyers I can understand, but sellers?

~~~
pgrote
To pay the fees associated with selling.

~~~
gondo
why isn't the fee deducted from the selling price before money are wired from
etsy to seller?

~~~
AnssiH
Traditionally buyers paid via PayPal directly to the seller's account without
Etsy seeing the money. This is still a supported option for grandfathered
sellers and for sellers in countries where Etsy Payments does not operate, it
is called "standalone PayPal".

A couple of months ago, for those sellers that use Etsy Payments, Etsy
actually switched to deducting the fees from the sales like you suggest. But
that still doesn't cover the cases where buyers want a refund afterwards, or
if the seller had no sales to cover the listing fees.

------
megous
Why can't people just prepay a credit on the service, and the service provider
could deduce fees from the credit? A lot of other services are doing that. It
would solve all kind of associated issues with this these kinds of errors,
like cancelled cards, overdraft fees, etc.

~~~
scribu
Why would you lend a company money, interest-free, when you could put it in a
savings account, invest it, pay for something else, etc.?

~~~
megous
Why not? I've decided to spend the money in the next few months on the service
already, so the money is allocated anyway. I do it regularly. It also avoids
paying the card companies' fees, because I can just wire the money.

A lot of serices are structured this way, anyway. Download services, hosting
services, even marketplaces like Etsy. Really, Etsy's model sounds more like
an exception from my POV. But I'm not in the US.

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aqwsedopl
Exactly why I never connect real bank accounts to Venmo or even paypal. I only
trust credit card companies lol. My Venmo is built up from friends sending me
when I paid for them in cash.

Also if I were to connect bank accounts, I have several buffer accounts which
are low on purpose

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crooked-v
Etsy's TOS requires mandatory arbitration, unsurprisingly, but I wonder what
their reaction would be to thousands of arbitration claims over overdraft fees
and other financial hardships.

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Animats
This seems to be simple theft. Report it as a crime.

~~~
tcj_phx
Mens rea - Latin for “guilty mind” - is the intention to commit a crime, and
must be present for many types of prosecutions.

[https://en.wikipedia.org/wiki/Mens_rea](https://en.wikipedia.org/wiki/Mens_rea)

~~~
pmoriarty
I'm interested in how mens rea squares with the oft-cited "ignorance of the
law is no excuse" (is there a Latin term for that?).

If you don't know you're breaking a law there can be no mens rea, can there?

~~~
capnrefsmmat
_Mens rea_ means you intended to do the criminal thing that you did, not
necessarily that you knew it was criminal. Homicide is homicide because you
intended to kill someone, even if you didn't know that was a crime; if you did
not intend to kill someone, you lack the _mens rea_ but may still be guilty of
negligent homicide or some related crime.

Certain crimes do require knowledge of the law, like tax evasion: the tax code
is assumed to be so complicated that to be guilty of criminal tax evasion it
must be proven that you _knew_ you were evading taxes. Wikipedia has a
summary:
[https://en.wikipedia.org/wiki/Mens_rea#Ignorance_of_the_law_...](https://en.wikipedia.org/wiki/Mens_rea#Ignorance_of_the_law_and_mens_rea)

~~~
cperciva
_if you did not intend to kill someone, you lack the mens rea but may still be
guilty of negligent homicide_

The standard varies by jurisdiction, but it's quite common for "intended to
cause non-lethal injury but accidentally killed the victim" to be treated as
murder; this arises for example in the "eggshell skull rule".

Some states also have what is referred to as "constructive murder" whereby you
can be convicted of murder if you commit a serious crime and someone dies,
regardless of whether the possibility of a death was reasonably forseeable; in
Canada this has been ruled unconstitutional on the grounds of lacking _mens
rea_ but in the USA courts generally accept that having the intent to commit a
serious (but non-lethal) crime meets the requirement.

~~~
gamblor956
The eggshell skull rule is from torts, not criminal law and it would be
unconstitutional to apply it to criminal law. You're thinking of constructive
murder, where the intent to commit a serious felony everyone to the intent to
cause all foreseeable harms that the attempt could engender.

~~~
cperciva
Different countries, different constitutions. In Canada, constructive murder
was ruled unconstitutional; but if you intend to shoot someone in the leg
(say, to stop them from pursuing you) the lack of intent to kill would not
save you from a murder charge.

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willart4food
There's not such a thing as a mistake, only lessons. Lessons learned or
otherwise.

I have 1 special account for these type of things, and I keep it empty or with
just enough $ to cover what is rightfully owed.

I am no genius. I have learned my lessopn (from PayPal).

~~~
pmoriarty
You'd still be liable for overdraft charges, wouldn't you?

~~~
ceejayoz
You can decline overdraft "protection".

~~~
coding123
Not really. I have overdraft protection disabled on my Ally account. I get
fees all the time when it is overdrafted anyway. I really do want to punch the
person in charge of letting accounts go negative. I would rather get denied at
the POS than overdraft and suffer fees.

~~~
mschuster91
In Germany, we have special automated loans ("Dispokredit") for this
situation. These are expensive (14% p.a.!), but as they are meant to be used
only in emergencies and for a short time only, such a situation as here would
not incur fees above 1€, as the interest is most often calculated daily.

~~~
astura
Some banks in the US have this, some charge a fee to use it. It's a niche
product though.

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bellerose
I’m a buyer and made a couple purchase last night on Etsy. All my credit card
info was saved on checkout with no verification required to use the card.
Surprised me in comparison to how Amazon or other retailers typically require
the full card number be re-entered on checkout. I understand this is different
but seems like a bad convenience trade off.

~~~
zenexer
Amazon doesn’t require re-entry of any details on checkout, at least in the
US. I can click a button and immediately purchase something with minimal
confirmation.

I have never had to confirm any details with Amazon as far as I can remember.

~~~
bellerose
I'm in Canada and I've had to confirm details on my card. I guess outside US
thing.

~~~
zdragnar
In the US, you do have to confirm the details on your card when you change
your shipping address in Amazon, or you need to make any updates to it (i.e.
cvv / exiry date). Otherwise, not so much.

Edit: Oops, just noticed that point was also posted twice in sibling comments.
Oh well, third time's the charm I guess?

