Numerous Etsy sellers from mainland China who lost sleep over sudden drops in store traffic can finally breathe easier. The platform has acknowledged and fixed a technical issue related to DAC7 policy compliance that had paralyzed many Chinese stores at the seller verification stage, with affected accounts now gradually returning to normal operation.
Policy Implementation Hits Roadblock
The trouble began when Etsy implemented verification procedures to comply with DAC7 (EU Council Directive (EU) 2021/514), requiring sellers to confirm their account information. While this process flowed smoothly for most global sellers, mainland China stores encountered unexpected obstacles.
The core issue emerged at the third verification step. Mainland sellers typically register as individuals, needing only to provide national ID numbers. However, Etsy's system failed to properly recognize and record this information, leaving the "next step" button grayed out and effectively trapping sellers in verification limbo.
Frustrating Support Dead Ends
One affected seller described a 16-day support ordeal where Etsy instructed them to modify their Tax ID through Payoneer—only to discover Payoneer's personal accounts lack this functionality. This created an impossible loop: Etsy demanded tax information it couldn't modify, Payoneer couldn't accept the input, yet non-compliance risked store suspension.
After reporting the issue as a technical bug and temporarily abandoning hope, the seller recently noticed restored traffic and learned Etsy had quietly fixed the problem. Their subsequent announcement in seller communities sparked widespread relief as others confirmed their stores had similarly revived.
Platform Acknowledges Technical Failure
Etsy's official notice confirmed the verification blockage resulted from technical failures, temporarily waiving the information confirmation requirement. The platform pledged to provide 10 days' notice before reinitiating the process, allowing Chinese sellers to refocus on business operations.
The incident highlights challenges in Etsy's cross-border policy implementation. While DAC7 aims to enhance tax transparency, its execution must account for regional variations to avoid unintended operational disruptions.
Though Etsy hasn't disclosed detailed remediation plans, the resolution suggests growing attention to mainland China sellers' needs. For merchants who endured weeks of uncertainty, the fix brings renewed opportunity to rebuild their Etsy businesses while hoping for more robust system improvements moving forward.
The episode serves as a reminder for cross-border e-commerce sellers to vigilantly monitor platform policy changes while maintaining open communication channels to report systemic issues that affect fair marketplace participation.