Etsy published updated guidelines on artificial intelligence (AI) for sellers on Oct. 22. The marketplace is restricting specific categories of AI-generated content, tightening listing photo requirements and introducing new enforcement tools.

The changes signal a larger effort to protect buyer trust, which Etsy says is being eroded as AI-generated listings proliferate across the platform.

“AI should support your creativity and craftsmanship, not replace them,” Etsy vice president of customer operations James Ossman wrote in the update. “Buyers should always be able to understand the role you play in every item you sell on Etsy.”

Etsy is No. 20 in Digital Commerce360’s Global Online Marketplaces Database. The market research tool ranks the 100 largest marketplaces by third-party gross merchandise value (GMV).

How Etsy’s new AI guidelines work

Etsy’s seller handbook now includes a categorical ban on AI-generated functional guides, including patterns, recipes or instructions. Listings for these items must also show a real result made using the seller’s own instructions, not an AI-generated image of what the finished product might look like.

In addition, Etsy now requires that every listing include at least one unedited photo of the actual item against a real background. Supplemental images can still use AI-assisted editing to adjust lighting, color, cropping or backgrounds, but all photos must accurately represent the item a buyer will receive.

Notably, the marketplace is not banning AI-generated art outright. The policy continues to allow it when sellers play a clear creative role in its creation, such as a fantasy illustration based on the seller’s own prompt and creative direction. Sellers must still disclose when an item is created using AI and cannot misrepresent AI-generated work as handmade.

Bot-generated listings without human involvement are explicitly prohibited and will result in listing removal, Etsy said.

How Etsy will enforce the new rules

Meanwhile, Etsy says it will alert sellers if it detects AI-generated images during the listing process. It intends to provide guidance to help sellers meet requirements.

Looking ahead, the marketplace said it will expand that detection to existing listings over time. Sellers whose listings are removed can appeal through the Policy violations page in Etsy’s Shop Manager options.

Etsy is also adding a new buyer-facing reporting option so consumers can flag listings that they believe are AI-generated. Those reports will initially inform Etsy’s understanding of how buyers perceive AI misuse, rather than trigger immediate enforcement action, with removal activity expanding in the coming months as detection tools improve.

Etsy’s evolving relationship with AI

As it tightens AI restrictions on sellers, Etsy also continues to use AI itself. 

As Digital Commerce 360 reported in August, CEO Kruti Goyal described Etsy’s AI strategy as focused on three areas: improving product discovery, delivering more personalized shopping experiences, and experimenting with agentic and conversational commerce. 

“We see the biggest opportunity for AI on Etsy itself,” Goyal said on the company’s Q2 earnings call. “It’s really about using AI to make Etsy much, much better at connecting the right buyers with the right sellers.”

Etsy has partnered with OpenAI, Google and Microsoft on agentic commerce,  announced it would sell directly through Google AI Mode in January and is a backer of Google’s Agent Payments Protocol. Goyal said in August that agentic AI experiences still account for less than 1% of Etsy’s traffic, though the referrals that do come through AI channels carry higher buyer intent and average order value than typical traffic.

In 2025, Etsy rolled out AI-powered tools for sellers, including a writing assistant that mimics a seller’s voice, bulk listing suggestions and AI-generated review highlights.

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