Etsy tightens rules to combat AI-generated listings and misleading products

One artist recently reported that AI-made pet portraits were outperforming their work and selling at a lower price point. Crochet shoppers have also expressed frustration, noting that purchased patterns often yield results that differ significantly from the images in the listings, leading to suspicions of AI generation.

Effective October 22nd, Etsy’s new rules mandate that sellers include at least one unaltered photograph of the actual item against a real background. Listings generated by bots without human involvement are prohibited, as are guides like patterns and recipes created with AI. These guides must now demonstrate a real-world result made from the provided instructions. Etsy plans to expand these measures as its detection tools improve.

“As AI makes it easier to create and replicate products at scale, we believe the human creativity, craftsmanship and connection that have always made Etsy special will matter even more,” stated CEO Kruti Patel Goyal. While Etsy is cracking down on certain AI uses, the company is also utilizing the technology to enhance product recommendations and assist sellers.

However, verifying authenticity remains a significant hurdle. As Boston University business professor Andrei Hagiu explained to Fortune, “‘handmade’ is hard to define precisely and even harder to verify at scale.” Sellers may use purchased components or have items manufactured, making it difficult to distinguish genuine handmade creations from those assembled or outsourced.

Etsy has long struggled with sellers violating its rules, including those reselling goods or engaging in dropshipping – practices that contradict the platform’s ethos. One Reddit user, “RegulatoryCapture,” purchased picnic table plans from an Etsy shop, WoodGears, only to receive instructions for a different table and a photo belonging to Dan’s Outdoor Furniture. The user, who preferred to remain anonymous, received a refund but expressed diminished trust in Etsy, having previously purchased a wedding band and wallet from the platform.

Dan’s Outdoor Furniture confirmed they did not authorize WoodGears to use their image. Etsy and WoodGears did not respond to requests for comment.

Professor Hagiu suggests a potential solution: separating permission to sell on Etsy from a verified “handmade” designation. Sellers could apply for this status by providing evidence of their production methods, subject to audits. This would allow Etsy to focus verification efforts on specific items rather than attempting to track the production history of every listing.

“A narrower promise that the platform can credibly uphold may be more valuable than a broad promise it cannot reliably enforce,” Hagiu concluded.