A steady stream of sellers report the same sequence: a handful of parcels go missing in the post, buyers open cases, Etsy refunds them, and the shop gets a warning about its case rate. Nothing in that chain was the seller's doing, and the metric does not care.
The frustration is real, but the metric is published and the thresholds are specific. Knowing the actual numbers changes how you handle a claim while it is still open, which is the only point where you have any influence.
The actual thresholds
Etsy's Customer Service Standards set out four measures. The case rate is the one that catches people, because the allowance for a small shop is absolute rather than proportional.
- Case rate, under 300 orders: no more than three orders should have cases refunded from your account.
- Case rate, 300 orders or more: less than 1% of cases should be refunded from your account.
- Message response rate: respond to 80% of first messages in a thread within 48 hours.
- On-time shipping: at least 80% of orders need to ship on time.
- Average review rating, under 40 reviews: no more than four reviews at three stars or less. At 40 or more reviews: under 10% of reviews at three stars or less.
Read the first line again. A shop with 180 orders has a budget of three refunded cases, ever, in the measurement window. That is why a bad month with a carrier feels disproportionate: proportionally it is nothing, but the standard is not proportional at that volume.
The exclusions almost nobody knows about
Not every refunded case counts against you. Etsy excludes several categories, and the difference between a case that counts and one that does not is often a decision you make in the first hour.
- Orders over $250 are excluded.
- Orders eligible for Etsy Purchase Protection are excluded.
- Orders you refunded before the buyer opened a case are excluded.
That third one is the lever. If a parcel is clearly lost and the buyer is unhappy, refunding before they open a case keeps it off the metric entirely. Waiting to see whether they escalate is the expensive option, and it is the one most sellers instinctively take.
What Purchase Protection actually requires
Purchase Protection is the mechanism that both keeps a case off your record and covers the refund up to $250. It is not automatic. You qualify by doing specific things, and they are the ordinary operational discipline you were probably doing anyway.
- Ship within your stated processing time.
- Provide valid tracking, or use a shipping label purchased through Etsy.
- Have an estimated delivery date on the listing.
- Make sure the item matches the photos and description.
- Respond to buyer messages within 48 hours and meet the customer service standards.
Coverage runs to $250 of a refund, with anything above that on you, which is the practical argument for insuring higher-value orders separately. Damage claims are limited to the first instance in a calendar year, so a run of breakages is not covered the way a run of lost parcels is.
The operational habits that keep the number down
- Buy labels through Etsy where you can, so tracking registers on the order automatically rather than depending on you pasting it in.
- Set processing times you can hit on your worst week, not your best one. On-time shipping is a separate metric being measured at the same time.
- Answer the first message fast even if the answer is 'looking into this now'. The 48-hour clock is on the first response, and it protects both the response-rate metric and Purchase Protection eligibility.
- When a parcel is genuinely lost, refund before the case opens. You were going to pay it either way.
- Photograph or film the packing of anything fragile or high-value. It does not affect the metric directly, but it is what turns a 'not as described' dispute into a resolvable one.
How many cases can a small Etsy shop have before it is a problem?
For a shop with fewer than 300 orders, Etsy's standard is no more than three orders with cases refunded from the account. At 300 orders or more the standard switches to less than 1% of cases refunded.
Do cases count against me if the carrier lost the parcel?
A refunded case generally counts regardless of fault, which is why the exclusions matter. Orders eligible for Purchase Protection, orders over $250, and orders you refunded before a case was opened are excluded.
Does refunding a buyer early hurt my metrics?
No, and it helps. Orders you refunded before the buyer opened a case are excluded from the case rate, so an early refund on a lost parcel costs you the same money and keeps the record clean.
What happens if I fall below Etsy's customer service standards?
Etsy describes reduced search visibility, loss of Purchase Protection eligibility, and in serious cases temporary or permanent suspension of selling privileges.
How much does Purchase Protection cover?
Up to $250 of a refund per eligible claim. Anything above that is the seller's responsibility, which is why separate shipping insurance is worth considering on higher-value orders.
Every refunded case is also a fee event that most sellers never reconcile, because the sale is gone but the costs of getting there were not.
See what a sale actually leaves you after Etsy's cut →