The Dark Side of Etsy: Privacy Violations Exposed!

The Dark Side of Etsy: Privacy Violations Exposed!

Table of Contents

  1. Introduction
  2. Concerns with Plaid
  3. Etsy's Requirement for Sellers
  4. Options for Sellers
  5. Indie Sellers Guild's Response
  6. Background of Plaid's Privacy Violations
  7. Risks of Sharing Banking Information
  8. Etsy's Motive for Requiring Plaid
  9. How to Verify Bank Accounts without Plaid
  10. Setting up an Online-Only Bank Account
  11. Updating Bank Account Information on Etsy
  12. Petition to Provide Alternative Verification Options
  13. Indie Sellers Guild's Actions and Resources
  14. Legal Options for Sellers
  15. Conclusion



In this article, we will discuss the recent controversy surrounding Etsy's decision to force US sellers to use Plaid, a third-party company with alleged privacy violations, to reverify their bank accounts. We will delve into the concerns with Plaid, examine Etsy's requirement for sellers, explore alternative options for sellers, and shed light on the steps taken by the Indie Sellers Guild to address this issue.

Concerns with Plaid

Plaid, the third-party company chosen by Etsy, has faced scrutiny due to its involvement in a class action lawsuit over user privacy violations. The allegations suggest that Plaid obtained more financial data than necessary and even acquired login credentials through its interface, potentially compromising user security. The Indie Sellers Guild received warnings from its members and discovered that banking security experts deem linking bank accounts to Plaid as a risky move.

Etsy's Requirement for Sellers

In late August of 2022, Etsy informed US-based sellers that they had to verify their bank accounts using Plaid. This requirement disrupted the smooth operations of established sellers who had already connected and verified their bank accounts with Etsy. The Indie Sellers Guild observed a staggered rollout of this notification, which created confusion and concern among sellers.

Options for Sellers

Facing Etsy's demand to use Plaid, sellers had to assess their options. The Indie Sellers Guild conducted extensive research and highlighted the standard two micro deposit method as a safer alternative for verifying bank accounts through Plaid. This method eliminates the need to provide online banking login credentials, thereby reducing the risk of security breaches. Additionally, the Guild recommended the setup of a free online-only bank account to receive Etsy funds, safeguarding sellers' financial data.

Indie Sellers Guild's Response

The Indie Sellers Guild took prompt action to address the Etsy-Plaid controversy. They gathered and shared information on the situation, allowing sellers to stay informed. The Guild launched a petition urging Etsy to provide additional verification options, ensuring sellers' privacy and security. They also disseminated social media graphics and a press release to raise awareness among sellers and the general public about the risks associated with using Plaid. Furthermore, the Guild attempted to file a formal complaint with the Federal Trade Commission (FTC) and sought legal advice to explore sellers' legal options.

Background of Plaid's Privacy Violations

Plaid's involvement in a class action lawsuit concerning user privacy violations raises serious concerns about the risks associated with their services. The lawsuit alleges that Plaid collected excessive financial data and obtained login credentials deceptively, resembling users' own banking login screens. While Plaid denies these allegations, the Indie Sellers Guild identified the potential dangers associated with relinquishing banking and login information to Plaid.

Risks of Sharing Banking Information

Sharing online banking login credentials is inherently risky. The Indie Sellers Guild emphasized concerns raised by Melissa, a member pursuing a PhD in computer science, about Plaid's collection of extensive user data. Although Plaid claims not to sell users' information directly, they possess valuable data that could be used to create sophisticated consumer profiles. This information could potentially be misused, as Plaid may share it with partners, service providers, or developers. The Guild stressed the importance of recognizing the inherent risks involved in entrusting sensitive banking information to a third-party service.

Etsy's Motive for Requiring Plaid

Etsy justified their decision to require Plaid verification by citing compliance with anti-money laundering regulations. However, the specific money laundering regulation mentioned, the Anti-Money Laundering Act of 2020, appears to apply only to new accounts. Therefore, sellers with previously linked bank accounts on Etsy should be exempt from this regulatory requirement. The Indie Sellers Guild questioned Etsy's motive behind this decision and raised doubts about the necessity of subjecting established sellers to Plaid.

How to Verify Bank Accounts without Plaid

Sellers who are wary of using Plaid have alternative methods to verify their bank accounts. The Indie Sellers Guild recommended sellers avoid using their online banking login credentials with Plaid. Instead, they can opt for the manual verification method, which involves confirming their account details using the standard micro deposit process. This approach is considered safe by banking security experts and alleviates concerns about providing sensitive login information to Plaid.

Setting up an Online-Only Bank Account

To mitigate the risks associated with Plaid's collection of financial data, the Indie Sellers Guild suggested sellers create a separate online-only bank account solely for receiving Etsy funds. This option ensures that sellers' personal and primary business accounts remain safeguarded from potential privacy violations. By diverting Etsy sales money to an online-only bank account, sellers can subsequently transfer funds to their regular business bank accounts, minimizing exposure to data breaches or misuse.

Updating Bank Account Information on Etsy

To update bank account information on Etsy, sellers should navigate to the "Finances - Payment Settings" page in their shop dashboard. By selecting the "Update" button next to bank details, sellers can confirm their existing account number and choose the option to connect a new bank via manual verification. This process involves entering the routing and account numbers of the new bank account, allowing sellers to update their information securely without relying on Plaid.

Petition to Provide Alternative Verification Options

The Indie Sellers Guild launched a petition demanding that Etsy offer alternative options for sellers to verify their bank accounts. This initiative aims to raise awareness about the concerns surrounding Plaid and underscore the importance of sellers' privacy and security. Sellers are encouraged to support and share this petition to amplify the call for Etsy to prioritize sellers' interests and provide safer verification alternatives.

Indie Sellers Guild's Actions and Resources

The Indie Sellers Guild continues to actively gather and share information on the evolving situation. Sellers can join the Guild or follow their social media channels to stay updated on developments and access valuable resources. In addition to the petition, the Guild provides social media graphics for sharing and a press release template for sellers to raise awareness locally. By mobilizing a unified response, the Guild endeavors to compel Etsy to listen to sellers' concerns and offer a safer verification option.

Legal Options for Sellers

Recognizing the potential legal ramifications of Etsy's requirement to use Plaid, the Indie Sellers Guild sought legal advice to explore sellers' options. However, navigating the legal landscape presents challenges, particularly due to Etsy's terms of use, which restrict sellers' ability to file class action lawsuits against the platform. The Guild is actively researching and working to provide more information and updates on any legal avenues available to sellers affected by this issue.


The controversy surrounding Etsy's imposition of Plaid verification for US sellers has sparked concerns about privacy and security. The Indie Sellers Guild has diligently worked to address these concerns, informing sellers of the risks associated with Plaid while advocating for alternative verification options. Their efforts, including the petition and dissemination of resources, aim to protect sellers' interests and ensure a safer environment for conducting business on Etsy. Sellers are encouraged to stay informed, take precautionary measures, and add their voices to the collective push for a more secure and seller-friendly platform.


  • Etsy's requirement for US sellers to use Plaid for bank account verification sparks privacy and security concerns.
  • Plaid's involvement in a class action lawsuit over user privacy violations raises doubts about its credibility.
  • Alternative options for verifying bank accounts without Plaid include standard micro deposits and setting up online-only bank accounts.
  • The Indie Sellers Guild takes action through a petition, social media campaigns, and legal inquiries to protect sellers' interests.
  • Sellers should prioritize their privacy and security by avoiding sharing sensitive banking information with Plaid and demanding safer alternatives from Etsy.
Are you spending too much time looking for products?
App rating
Trending Product
Trusted Customers

Etsyshop has the world's largest selection of ETSY store to choose from, and each product has a large number of ETSY products, so you can choose ETSY store & product for your Ecommerce and dropshipping business without any hassle.

Browse More Content