Once a home for handmade, artists say Etsy's now overrun with AI

Global online marketplace Etsy is known as a haven for the handmade, with Etsy describing itself as a place "where creativity lives and thrives" with a mission to "keep commerce human".

But users of the platform are reporting an influx of AI-generated products, and in some cases, copied artistic work.

Hobart-based Lucy Cooper started selling handmade crochet items through Instagram when she was in her late teens.

She recently designed a spiral beanie inspired by 90s surfwear.

"I did a lot of research … and this one 'granny square' [traditional crochet pattern] stood out to me, and I thought, 'I've never seen anyone put that on a hat,'" she said.

"I was like, 'You know what, I'm gonna do that.'"

The design instantly took off, with Ms Cooper attracting global attention on social media.

"People from the UK started messaging me [and] the US and so many different places around the world. And that's when my video went viral [and] my DMs just blew up … I had over a hundred people in my messages."

She decided to make a crochet pattern for the beanie and sell it on Etsy.

But after a few months, she said she discovered another Etsy store selling an AI-generated version of her pattern, with AI-generated images.

Etsy users who purchased the item reached out to Lucy and said it was an AI-generated pattern and did not effectively produce the beanie.

"I went straight into a bit of a sad moment," she said.

"It was a lot of work that I feel like was kind of belittled.

"There's a big difference between being inspired by something and completely copying it without someone's permission."

At the time of writing, the seller had 67 products for purchase and had made 720 sales.

The ABC put images from two different products through an AI-detection service, with the tool determining they were 97 per cent "fake".

The seller has been contacted for comment.

AI tech makes copying easy

It is not the first time this has happened. Artists across the globe have voiced frustrations after discovering Etsy stores selling AI copies of their creative work.

In an Instagram post, Lora (@im.rugs), a rug maker, said, "I'm genuinely disappointed that Etsy allows this. I'm seeing more and more artists being ripped off, and it's not okay."

In another post, a UK-based creative (@luneclubstudios) who makes wall art said, "AI tech has made it so easy to copy someone else's work at the click of a button, and then real artists are left to compete with cheaper AI-generated versions of their own art."

But whilst many creatives are using social media to speak up against copying and broader use of AI, some social media influencers are encouraging people to use AI on Etsy.

One influencer (@ivy.system) made an Instagram post with a caption that said, "I made [this print] in about 12 minutes using AI. No Photoshop. No Canva. No design skills … That one file now covers my rent".

"I'm not a designer. I'm not an artist. I never studied anything creative. I just found a prompt formula that creates prints people actually want to buy,"

they said.

In turn, frustrated buyers are asking others for help identifying AI stores on Etsy, lamenting that the app has turned into an AI "wasteland".

Discussions created on Reddit about the issue include topics such as:

Got Scammed by AI pattern

Etsy has become an AI dropshipping wasteland

I got scammed on Etsy with an AI pattern

I accidentally bought an AI pattern on Etsy, can I get my money back? They stole photos from a legit creator so I couldn't tell it was AI until I bought it

Here to warn yall of an artificial intelligence Etsy shop

Did I get scammed by an AI Etsy crochet pattern? The instructions don't make sense with the result photo 

In a statement, Etsy's vice-president of customer operations, James Ossman, said the company's standard was "centred on human creativity".

"Sellers may use AI as a tool, but not to deceive buyers, misrepresent an item, or copy the work of others," he said.

"We also know standards are only meaningful when they're enforced. 

"Doing that across a marketplace of Etsy's scale is complex, and we have more work to do.

"We're continuing to improve how we identify and remove listings that don't belong, so that our marketplace remains a place where human creativity can thrive."

When does copyright law protect you from AI?

There has been ongoing public debate about AI copyright laws in recent years.

The federal government ruled out a copyright exemption for AI companies training their models on Australian creative works in October 2025. 

However, a recently leaked government proposal suggested reforms that would allow AI companies to train on materials found online, requiring creators to opt out to protect their work.

Melbourne-based professor of law, Jeannie Paterson, said the current debate addressed the training of AI models, but not their output.

"The issue of AI copying or mimicking human content is a different one because we're looking at outputs, not inputs," Professor Paterson said.

She explained that uploading an image of a creative work to an AI program and asking for a variation may be in breach of copyright, but the legality is "very unclear."

"Copyright is clumsy when we're applying [it] to AI," she said.

"AI has made it possible to copy an artwork … and then produce a variation on it. Copyright attaches to creative works, but it doesn't attach to the style of a creative work.

"So, if the AI-generated output is in the style but isn't the same, then that's not necessarily a breach of copyright."

She said that whilst there are several legal protections for artists, they all "have their limits" and enforcing protections can be challenging.

"We need clarity for artists on what their rights are in the AI age, and also clarity on how they can pursue and enforce those rights."