Etsy's AI Policy and New York's Synthetic Performer Law: What Sellers Must Do in 2026

Etsy's AI Policy and New York's Synthetic Performer Law: What Sellers Must Do in 2026

By The myShop Team · 2026-07-09 · 12 min read

Quick answer: If you use AI in your shop, you now have two disclosure obligations to track. Etsy requires you to disclose AI-assisted items in the listing and file them under "Designed by" rather than "Handmade." Separately, New York's synthetic performer law, in effect since June 9, 2026, requires a clear disclosure whenever a paid advertisement features an AI-generated person or voice. In both cases the rule is the same: if AI made it, you have to say so.


Key takeaways

  • Etsy allows AI in the creative process but requires disclosure in the listing description.
  • AI-assisted work must be listed as "Designed by a seller," never "Made by" or "Handmade."
  • Selling standalone AI prompt bundles is not allowed on Etsy.
  • New York's synthetic performer law applies to advertising, not product listings, and took effect June 9, 2026.
  • Penalties under the New York law are $1,000 for a first violation and $5,000 for each one after.
  • One habit covers both rules: treat AI disclosure as your default, not an afterthought.


If you use AI anywhere in your shop, whether that is designing a print, generating a product mockup, writing product copy, or putting together an ad, the rules shifted this year and it is worth catching up. Etsy tightened its creativity standards in the middle of 2025, and New York passed the first law in the country that forces advertisers to disclose AI-generated performers. This guide walks through both, explains who they apply to, and ends with a checklist and disclosure examples you can use today.


What is Etsy's AI policy in 2026?

Etsy has not banned AI from the creative process. What it will not tolerate is sellers passing AI work off as something it is not. The policy sits inside Etsy's Creativity Standards, and it is built around a simple expectation: buyers should know what they are actually buying. A shopper who thinks they are getting a hand-painted portrait deserves to know if the image came out of a generative tool. That gap between expectation and reality is exactly what Etsy is trying to close.

For sellers, that translates into a handful of concrete rules. Get these right and AI stays a legitimate part of your workflow. Get them wrong and you risk having listings removed, and in repeat cases, having your shop put at risk.


Do you have to disclose AI use on Etsy?

Yes. If an item was created with the help of generative AI, you need to say so in the listing description. Etsy leans heavily on automated enforcement, and a missing or vague disclosure is one of the quickest ways to get a listing pulled. The safest approach is to be specific about what role AI played. A buyer and Etsy's systems should both be able to tell, from the description alone, that AI was involved and how.

Disclosure is not a penalty box. Plenty of successful shops sell AI-assisted art openly and do well, precisely because they are upfront. Shoppers who want AI art can find it, and shoppers who do not are not misled. Transparency also protects you if a buyer later complains, because your listing already set the right expectation.


Why can't you call AI art "handmade" on Etsy?

AI-assisted work cannot be listed as "Made by" or "Handmade." It belongs under "Designed by a seller," which is the category for original designs, including seller-prompted AI art, that are sold as digital downloads or produced by a third party. The distinction matters because "Handmade" carries a specific promise on Etsy about human craft, and stretching that label to cover AI output undermines the entire marketplace. Miscategorizing here is treated as a real violation, not a gray area, so it is worth double-checking your listings.

Practically, this means the language you use throughout the listing should match the category. If your item is "Designed by," lean into that framing. Describe your concept, your prompt work, your editing and curation, and the final product. Do not borrow the vocabulary of handmade craft for something a machine generated from your instructions.


Can you sell AI prompts on Etsy?

You can use your own prompts to create art you sell, but you cannot sell the prompts on their own. Etsy allows art built from your original prompts, like a fantasy landscape or a custom pet portrait, because it treats your prompt and your curation as genuine creative input. That same logic is why selling standalone prompt bundles is off limits. Etsy considers the prompt part of the finished work, not a separate product to be packaged and resold. If you have a shop full of prompt packs, that is a direct compliance problem worth fixing before enforcement finds it.


What changed in Etsy's Creativity Standards?

Etsy tightened its rules with a Creativity Standards update on June 10, 2025. The update sharpened the expectations around originality and disclosure, and it followed an earlier 2024 policy that first spelled out how generative AI items should be handled. If you set up your shop before these changes, your older listings may not meet the current standard, so it is worth auditing anything created before mid-2025.


What should you do if Etsy wrongly flags your listing?

Automated enforcement is fast, but it is not perfect, and compliant sellers do sometimes get caught in it. The good news is that Etsy rolled out a listing appeals feature in the fall of 2025, so an automated takedown is no longer the final word. If you know a flagged listing follows the rules, use the appeals process rather than simply relisting the same item and hoping it slips through. Relisting without fixing anything can look like you are trying to dodge enforcement, which is not the impression you want to give.


What is New York's synthetic performer law?

This one reaches beyond Etsy and into how you advertise. New York's synthetic performer law, S.8420-A, took effect on June 9, 2026. It is the first law of its kind in the United States, and it applies to advertising rather than to product listings themselves. If you only ever post organic listings and never run paid ads with AI-generated people, this section may not touch you. If you run video or audio ads, read carefully.


What counts as a synthetic performer?

A synthetic performer is a digital asset created, reproduced, or modified by computer, using generative AI or a software algorithm, that is meant to give the impression it is a human performer in an audio, visual, or audiovisual performance. In plain terms, think of an AI-generated spokesperson in a video ad, or a synthetic voice reading your promo script, or a computer-made "model" presenting your product. The law is aimed at situations where a viewer might reasonably believe they are watching or listening to a real person when they are not.


Who has to comply, and when?

The law says that any person who produces or creates an advertisement for a commercial purpose must conspicuously disclose that a synthetic performer appears in the ad, where that person has actual knowledge of the use. The trigger is the advertisement, not the size of your business, which is the part small sellers often miss. If you run ads that feature AI-generated people or voices and those ads reach New York consumers, you are in scope. The effective date was June 9, 2026, so this is already live, not something coming down the road.

The word "conspicuous" matters. A disclosure buried in tiny text or hidden at the end of a long caption is unlikely to satisfy the requirement. The point is that an ordinary viewer should notice it and understand it without hunting for it.


What are the penalties?

The penalties are civil. A first violation carries a $1,000 penalty, and each violation after that carries $5,000. Those numbers are modest for a large advertiser but meaningful for a small shop, and they can add up quickly if the same non-compliant ad runs at scale. The cost of adding a clear disclosure is essentially zero, which makes compliance the obvious choice.


Is there an exception to the New York law?

Yes. Promotional material for expressive works like films, television programs, and video games is exempt, as long as the synthetic performer is used in the advertisement the same way it is used in the underlying work. That is why a movie trailer featuring a de-aged actor does not need the same label your AI-voiced product ad would. For most product sellers this exception will not apply, but it is useful to understand why the law treats a film trailer differently from a typical commercial.


How Etsy's policy and New York's law fit together

At first glance these look like two separate problems, one about product listings and one about advertising. But they point in exactly the same direction, and that is the useful insight for sellers. Regulators and platforms are converging on a single expectation: when AI is involved in something a consumer sees or buys, that involvement should be disclosed clearly and up front. The specific mechanics differ, but the underlying principle is identical.

Here is a side-by-side view of what each one asks of you.

QuestionEtsy AI policyNew York synthetic performer lawWhat does it govern?Product listings on EtsyAdvertisements for commercial purposesWhat triggers it?Selling an AI-assisted itemAn ad featuring an AI-generated performer or voiceWhat do you have to do?Disclose AI use and use the "Designed by" categoryAdd a conspicuous disclosure in the adWho enforces it?Etsy, mostly through automationNew York State, through civil penaltiesCost of getting it wrong?Listing removal and shop risk$1,000, then $5,000 per violation

Because both come back to the same habit, you do not need two separate compliance systems. You need one instinct, applied consistently: whenever AI touches something a customer will see, disclose it.


An AI compliance checklist for your shop

Use this as a quick pass over your shop and your marketing. If you can check every box, you are in good shape under both rules.

  • Every AI-assisted product has a clear disclosure in its listing description.
  • AI-assisted items are categorized as "Designed by," not "Made by" or "Handmade."
  • Your listing language matches the category, describing your design and curation rather than borrowing handmade-craft wording.
  • You are not selling standalone AI prompt bundles.
  • Listings created before mid-2025 have been reviewed against the current Creativity Standards.
  • Any ad that features an AI-generated person or voice includes a clear, visible disclosure.
  • You know which of your ads reach New York consumers.
  • If a compliant listing gets flagged, your plan is to appeal, not just relist.


How to write an AI disclosure that protects your shop

A good disclosure is short, plain, and specific. It should tell the reader what AI did without drowning the rest of your copy. For a listing, something like "This design was created by me using generative AI tools based on my original prompts, then refined and prepared for print" does the job. It names the AI involvement, credits your input, and sets an honest expectation.

For an advertisement that uses a synthetic performer, a line such as "This ad features an AI-generated performer" placed where viewers will actually see it satisfies the spirit of the New York law. Keep it visible. On video, that means on-screen text that is easy to read, not a note hidden in the description. The goal is that no reasonable viewer walks away thinking they saw a real person when they did not.

The shops that handle this well tend to treat disclosure as part of their brand rather than a legal chore. Being open about how you work builds trust with the growing number of buyers who care about it, and it costs you almost nothing to do.


Frequently asked questions


Is it legal to sell AI art on Etsy?

Yes, selling AI-assisted art on Etsy is allowed as long as you disclose the AI involvement and list the item under "Designed by a seller." What is not allowed is presenting AI work as handmade or selling prompts on their own.

Do I need to disclose AI if I only used it to write my product description?

Etsy's disclosure rules focus on AI used to create the item itself. Using AI to help draft copy is common, but you should always make sure the final description is accurate and reflects what the buyer is actually getting. When in doubt, more transparency is safer than less.

Does New York's law apply to my shop if I am not based in New York?

It can. The law is tied to advertisements that reach New York consumers, not to where your business is located. If you run ads featuring AI-generated people or voices and those ads are seen in New York, the disclosure requirement can apply to you.

What happens if I forget to disclose AI in an ad?

Under the New York law, a first violation carries a $1,000 civil penalty and each subsequent violation carries $5,000. The simplest way to avoid this is to build a visible AI disclosure into any ad that uses a synthetic performer from the start.

Will these rules get stricter?

The clear trend is toward more disclosure, not less. Etsy has tightened its standards more than once, and New York is the first of what will likely be several states to regulate AI-generated performers. Building disclosure into your process now is the best way to stay ahead of whatever comes next.


The bottom line

None of this shuts AI out of your shop. It just means the sellers who come out ahead are the ones who are upfront about how they work. Etsy wants honest listings, New York wants honest ads, and both are really asking for the same thing: tell people when AI is involved. Being transparent is fast becoming the cost of using these tools, and the shops that build it into their process now will spend a lot less time fighting takedowns and penalties down the road.


This article is general information and not legal advice. For questions about how New York's law or Etsy's policies apply to your specific situation, talk to a qualified attorney.