Etsy Introduces AI-Generated Item Guidelines in Updated Seller Policy

Etsy is currently facing challenges due to a surge in generic, low-quality products and AI-generated items on its platform. In response, the company updated its seller policy on Tuesday, introducing new labels that clearly indicate whether an item was made, designed, sourced, or curated by the seller. This marks a significant step in addressing the role of artificial intelligence in the marketplace, as Etsy refines its guidelines on acceptable products.

The newly established “Creativity Standards” mandate that sellers categorize the more than 100 million products on Etsy with specific labels reflecting the level of “human involvement” in their creation. These labels can be found in the “Item Details” section of each product description.

For instance, vintage items sold by store owners will be marked as “Handpicked.” Craft and party supplies will be labeled as “Sourced.” The “Handmade” designation applies to items crafted physically by the seller or made with tools like a 3D printer or Cricut machine.

The introduction of the “Designed” label addresses the growing trend of AI-generated products overtaking the once-hands-on marketplace. Etsy has faced significant criticism for permitting AI art, as its presence affects the work of traditional artists. Despite the ethical dilemmas, the platform is integrating this technology into its framework.

As stated in Etsy's Seller Handbook, sellers may “utilize their original prompts along with AI tools to create the artwork they sell on Etsy.” Items designed using generative AI or other digital tools must be labeled as “Designed by,” informing buyers that the item may involve some AI assistance.

Etsy provided examples of compliant AI usage, such as creating a fantasy scene from a seller’s original input or generating a custom pet portrait through AI tools. However, sellers must disclose in their product descriptions whether AI was involved in the item’s creation.

While Etsy allows sellers to create products using AI, termed “Seller-prompted AI creations,” it prohibits them from selling AI prompts, which have been increasingly common on the platform. Listings like “10,000 Midjourney Prompts” and “Ultimate ChatGPT Prompts Pack” will be flagged and removed, according to a company spokesperson.

During the first-quarter earnings call, CEO Josh Silverman reassured investors and sellers of Etsy’s dedication to maintaining a “human touch” in commerce. He noted that the company has removed four times more listings violating its Handmade policy compared to the previous year.

Etsy also recently unveiled ‘Gift Mode,’ an innovative AI-powered feature that generates over 200 gift guides to enhance the shopping experience.