Avoid Legal Trouble: Laws Every Etsy Seller Needs to Know

Table of Contents

1. Introduction
2. Understanding Etsy's Policies and Guidelines
3. Additional Laws Related to Selling Online
4. Running Sales on Etsy
5. Email Marketing and Privacy Laws
6. Selling Toys and Handcrafted Items for Children
7. Selling Food Items Online
8. Labeling Products as "All-Natural"
9. Copyright and Trademark Violations on Etsy
10. Conclusion

Understanding Etsy's Policies and Guidelines

As an Etsy seller, it's important to understand the platform's policies and guidelines, which are laid out in the House Rules section of the seller handbook. However, even if you're following all of Etsy's specific rules, there are actually additional laws related to selling online that you may not be aware of. And breaking some of these laws can land you in big legal trouble.

Additional Laws Related to Selling Online

As someone who spends 99% of my time working within the Etsy creative space, I can't tell you how frequently I come across sellers who are unknowingly breaking laws related to privacy, deceptive sales tactics, and the general mislabeling of products. Let's dive in and explore some of these laws.

Running Sales on Etsy

Running a sale in your Etsy shop is an awesome way to attract attention, celebrate a holiday, or even to clear old inventory. However, what many sellers don't realize is that RAISING prices in order to host a sale is actually against the law. In the US, sales, promotions, and coupons fall under the jurisdiction of the Federal Trade Commission, or the FTC. And according to the FTC's website, “The FTC considers it deceptive to offer an item for sale at a higher price for a short period of time in order to support a claim that an item is discounted when the price is then lowered."

On Etsy, I recommend pricing products within the top 10% of your industry, with any future sales and discounts already in mind at the point of pricing your products. This will ensure you're making the most of every sale, while still having a pricing structure that is flexible enough to occasionally host special promotions from time to time.

Email Marketing and Privacy Laws

When someone places an order in your shop, you may notice their email address attached to that order. And if you have an email list, this may sound like a great way to grow your audience with past customers who have already shown interest in your products. Unfortunately, adding individuals to an email list without their permission is against the law in many areas.

In Canada, the Canadian Anti Spam Law states that you can only contact people who have given their explicit consent to be contacted. In Europe, both the "ePrivacy directive", as well as GDPR laws state that the use of an individual’s email for direct marketing purposes is lawful only if that individual gave his/her prior consent. And in the United States, the laws become a little looser, with no real restrictions on adding someone to your list without consent - however - your emails must provide a clear opt-out at the bottom where the person can unsubscribe, AND the email must list your physical postal address at the bottom, or a PO Box.

If you have an email list, the best way to get subscribers on that list is by offering the option to them. On Etsy, you're allowed to place a link to join your email list within your shop and listings, or even on print-outs within your physical packages when they are shipped.

Selling Toys and Handcrafted Items for Children

Etsy is loaded with amazing toys and handcrafted plushies that make amazing gifts. However, while these items are okay to sell on Etsy, they cannot be marketed for children. In the US, the Consumer Product Safety Commission holds strict guidelines on items created for children, stating that: "All toys intended for use by children 12 years of age and under must be third-party tested and be certified in a Children’s Product Certificate as compliant to the federal toy safety standard enacted by Congress".

Remember - these laws exist for the reason of keeping children safe. For more information about how to get your products tested by an official CPSC-accepted laboratory, I'll leave a link down below.

Selling Food Items Online

If you sell consumable items such as baked goods, jams and jellies, dry mixes, popcorn, or nuts, it's important to understand laws within your local area about the sale of food online. In the US, every state has different laws and regulations when it comes to the online sale of food items, however - here are a few universal requirements that any food-related business can expect in order to legally operate:

• Yearly kitchen inspections from your local health department, even when running the business from your home kitchen.
• Zoning permits from your local or state government.
• A state business license.
• A pet-free and pest-free clean kitchen environment.
• And proper sanitary storage of all cold and dry ingredients.

For more information about selling food online from your home, you can typically reach out to your local health department for additional information related to your area.

Labeling Products as "All-Natural"

When it comes to items marketed as being "All natural", we typically assume that these items are good for us, whether they be food, cosmetics, or even candles. However, according to the FDA, items listed as being "all-natural" must genuinely be 100% natural. In other words, “‘All natural’ or ‘100 percent natural’ means just that—no artificial ingredients or chemicals.”

So when labeling an item as "all-natural", be sure to double-check with each of your suppliers to ensure that your products truly are made with 100% natural ingredients.

Copyright and Trademark Violations on Etsy

If you guessed that copyright and trademark violations would take the cake for #1 law broken on Etsy - you'd be correct. You cannot legally sell anything from movies, television, books, music, celebrities, video games, or famous characters of any sort unless they are in the public domain, or if you have purchased a license to sell them. Buying a Disney fabric to make a craft with is not the same as possessing a resale license, and the first sales doctrine only covers the purchase you made for the fabric, as that was the first sale. You are not authorized to resell these items.

Creating fan art of a character does not authorize you to profit from that character's likeness, even when you've done so in a style that is completely your own. And yes - I know there are a lot of sellers who violate these laws. But just as many sellers get shut down for it.

The best way to stay safe is to only list original concepts or designs that you've come up with yourself, to create products based on workings within the public domain, or to obtain licensing from the IP holder. In fact, I'm currently building a new bookish-themed shop with my business partner, Michelle, where we are licensing with popular authors in order to create officially licensed merch for their series. So if that's something you're interested in learning more about, feel free to let me know in the comments and I'll consider making some videos about it.

Conclusion

Overall, success on Etsy means understanding BOTH Etsy's rules, as well as the general laws related to online retail for your area. And with a little science, a lot of data, and some help from a trusted Etsy expert, you'll be well on your way to Etsy success.

Highlights

• Raising prices in order to host a sale is actually against the law.
• Adding individuals to an email list without their permission is against the law in many areas.
• Items marketed as being "All natural" must genuinely be 100% natural.
• Copyright and trademark violations are the #1 law broken on Etsy.

FAQ

Q: Can I raise prices before a sale on Etsy? A: No, raising prices in order to host a sale is actually against the law.

Q: Can I add individuals to an email list without their permission? A: No, adding individuals to an email list without their permission is against the law in many areas.

Q: Can I sell toys and handcrafted items for children on Etsy? A: Yes, but they cannot be marketed for children.

Q: Can I label products as "All-natural" if they contain some artificial ingredients? A: No, items listed as being "all-natural" must genuinely be 100% natural.

Q: Can I sell items featuring famous characters or brands on Etsy? A: No, you cannot legally sell anything from movies, television, books, music, celebrities, video games, or famous characters of any sort unless they are in the public domain, or if you have purchased a license to sell them.