Etsy announced updated AI use policies requiring most product listings to include at least one unedited photo of the product against a real background (Retail Dive - Technology). Functional guides such as patterns, recipes, and instructions can no longer be AI-generated and must showcase real results made using the guide (Retail Dive - Technology). Bot-generated listings are not allowed and will be removed, and buyers who receive products materially different from listings may receive refunds if the listing failed to meet the new image requirements (Retail Dive - Technology).
The marketplace has added an AI detection feature to its listing form that flags images Etsy detects may use AI, and is investing more into detection and removal tools (Retail Dive - Technology). For commerce practitioners, this creates a clear competitive advantage for sellers who can demonstrate authenticity and real craftsmanship, while raising compliance and content management costs for those relying on AI-generated assets. The policy reflects growing buyer expectations for transparency and authenticity in handmade and artisanal categories.
Notably, Etsy itself continues to invest heavily in AI across the business, with CEO Kruti Patel Goyal stating that the biggest opportunity for AI is using it to connect the right buyers with the right sellers through improved discovery, matching, and personalization (Retail Dive - Technology). This creates a paradox: while restricting seller-side AI use, Etsy is accelerating its own AI capabilities for internal operations.