Marketplace Sellers: Critical Warning — Hidden Deductions May Cause Incorrect GST, Tax Reporting AND Breach New AML/KYC Rules

Over recent months, sellers on eBay and Etsy have reported money disappearing from their seller balances without any matching chargeback or reversal appearing on their business bank statements. After analysing multiple cases, a clear pattern has emerged — and this has serious implications for GST, income tax, and Australia’s new Anti‑Money Laundering (AML) and Know Your Customer (KYC) rules.

Platforms Are Deducting Money Internally — Not Through the Banking System

When a buyer files:

• Item Not Received
• Request for Refund
• Payment Hold
• Reserve Adjustment
• Seller Protection Review

the marketplace often takes the money directly from the seller’s internal balance instead of processing a real chargeback through Visa/Mastercard.

This means:

• No bank reversal
• No chargeback code
• No financial‑sector record
• No audit trail

From your bank’s perspective, nothing happened — even though money was removed.

Why This Creates Serious GST & Tax Problems

Most Australian businesses rely on:

• bank statements
• accounting software
• transaction logs

as proof of income and expenses for ATO reporting.

But because marketplace deductions never pass through the financial system, they leave no trace in your business banking records.

This creates two major risks:

You may accidentally OVERPAY GST and income tax
If the marketplace removes money internally, your bank statement still shows the original sale amount.
You end up paying GST and tax on money you never actually received.

You may accidentally UNDERPAY GST or income tax
If internal deductions reduce your marketplace balance without you noticing, your accounting software may under‑report income.
During an ATO audit, there is no financial‑sector record explaining the missing money.

The “Peter‑to‑Paul” Mechanism Sellers Are Seeing

Across both platforms, sellers have observed the same pattern:

• Money taken from Seller A is used to cover refund liabilities or buyer claims for Seller B.
• This happens entirely inside the marketplace’s internal wallet system.

No bank involvement.
No financial‑sector oversight.
No audit trail.

This creates a hidden liability that only exists inside the platform — not in your business accounts.

Why This Is a Serious AML/KYC Loophole Under Australia’s New Rules

Australia’s updated AML/KYC framework requires:

• transparent financial flows
• traceable movement of funds
• auditable records
• clear identification of who paid who, and why

But when marketplaces move money internally:

• the bank cannot see the transaction
• AUSTRAC cannot see the transaction
• accountants cannot verify the transaction
• the seller cannot prove the transaction
• the ATO cannot reconcile the transaction

This creates an open loophole where money is transferred between unrelated parties (Seller A → Seller B’s buyer refund) without any financial‑sector visibility.

Under AML/KYC rules, this is a structural risk because funds are being redistributed between parties without passing through regulated financial channels.

This is exactly the type of behaviour AML/KYC reforms were designed to prevent.

Why Sellers Say This Resembles a Ponzi‑Style Structure

This is NOT an accusation of criminal activity.
This is a description of the mechanics sellers are experiencing.

Sellers say it resembles a Ponzi‑style model because:

• New seller money is used to cover old seller liabilities
• The platform avoids using its own capital
• Risk is pushed downward onto sellers
• Losses are hidden inside the platform instead of appearing in the financial system
• The system depends on continuous incoming payments to stay liquid

This is the “Peter pays Paul” behaviour sellers are talking about.

Again — this is about structural resemblance, not legal classification.

The AFCA Reporting Pathway Nobody Has Ever Used

Most sellers don’t realise that when eBay or Etsy withhold your funds internally, the issue becomes an Australian banking matter — not just a marketplace matter.

Your bank is responsible for handling payouts, reversals, merchant‑risk flags, AML/KYC compliance, and accurate financial reporting. If internal marketplace deductions cause missing money, incorrect GST reporting, or unexplained fund movements, you can lodge an AFCA complaint against your bank.

AFCA must then assess whether the bank mishandled the matter, whether AML/KYC obligations were breached, and whether the issue represents a systemic problem. If so, AFCA may need to escalate the matter to ASIC under mandatory breach‑reporting rules.

This is a regulatory pathway sellers have never used — and it forces oversight even when the marketplace is overseas.

What Sellers Should Do Immediately

• Track every order in your own ledger
• Compare marketplace balances against your bank deposits
• Screenshot every deduction
• Keep copies of all INR/refund notices
• Review GST and income tax calculations carefully
• Report unexplained deductions to your accountant
• Escalate repeated cases to ACCC, ASIC, or AUSTRAC
• Ask your accountant to check for over‑reported GST or over‑reported income

Businesses cannot rely solely on bank statements anymore.
Marketplace deductions are happening outside the financial system.

If you’ve experienced this, share your case below
The more examples sellers provide, the easier it becomes to map the scale of the issue and push for regulatory clarity.