The four categories, quoted from Etsy's policy
Etsy's Creativity Standards sort every listing into one of four categories. Here's the full set:
| Category | What it means | AI-touched items? |
|---|---|---|
| Made by a seller | You made the item yourself, no AI involved | No |
| Designed by a seller | You designed it, including with AI tools based on your own prompts | Yes -- this one |
| Handpicked by a seller | You curated/sourced finished items | No |
| Sourced by a seller | A supplier makes it to your specs | No |
Source: Etsy's Creativity Standards ("Etsy's House Rules"), last updated Jun 10, 2025.
Why "Designed by a seller" is the one that matters here
Of the four, "Designed by a seller" is the one Etsy's own policy explicitly ties to AI tools. Etsy defines the relevant sub-category directly:
"Seller-prompted AI creations: Creations that were generated using AI tools (e.g., AI image generators such as Dall-E) based on a seller's original prompts."
Source: Etsy's Creativity Standards (same page as above).
And Etsy's Seller Handbook confirms this use is permitted, not just tolerated:
"we have decided to continue to allow sellers to use their original prompts in combination with AI tools to create the artwork they sell on Etsy... Permitted examples of this might include a fantasy scene based on a seller's original prompt or inputs and produced by an AI generator, or a custom portrait of a buyer's pet generated using AI tools."
Source: Etsy Seller Handbook -- "What's Etsy's Stance on AI Creations?"
In plain terms: if you typed a prompt or gave instructions to an AI tool, and that tool's output is part of what you're selling -- the artwork itself, a digital template's design, a product photo's background, or the listing description's wording -- the listing belongs in "Designed by a seller," and the AI-disclosure sentence requirement applies to it.
A three-question path to your category
- Did an AI tool touch the image, the design, the mockup, or the written description, based on your own prompts or inputs? If yes, this listing is "Designed by a seller" and needs an AI-disclosure sentence in the description.
- Does a production partner (a manufacturer or print-on-demand service) make or print the item? If yes, a separate, additional disclosure applies on top of any AI disclosure. Etsy states this one directly too:
"Sellers must disclose that an item is made by a production partner, and provide accurate information about where the item will ship from."
Source: Etsy's Creativity Standards (same page as above).
- Did no AI tool touch anything, and you made it yourself? This listing is "Made by a seller." No AI disclosure is required.
A distinction worth being precise about
A physical, handmade item photographed with an AI-generated or AI-edited background is a mixed case: the item itself may still be "Made by a seller," while the listing photo's AI-assisted staging still needs its own disclosure sentence describing what was AI-touched and what wasn't -- the item you receive versus the scene it's photographed in. The category question and the disclosure question aren't always a single yes/no for the whole listing; sort out each element (item, mockup, description) separately if a listing mixes AI and non-AI parts.
What Etsy's policy explicitly rules out
Etsy's Creativity Standards explicitly exclude "AI prompt bundles" from the "Designed by a seller" category, and a companion page confirms Etsy prohibits selling AI prompt bundles as listings outright. If part of your shop sells prompts themselves rather than the AI-assisted output of using them, that's a different, separate policy question from the disclosure question this article covers.
Common ways sellers get their own category wrong
A few patterns come up often enough to name directly:
- Assuming "digital" automatically means "Designed by a seller." A hand-drawn digital illustration with no AI involvement anywhere in the process is still "Made by a seller" -- the category question is about AI involvement specifically, not about digital versus physical.
- Assuming any AI involvement anywhere makes the whole shop's catalog "Designed by a seller." The category applies per listing, not per shop. A shop can have some listings in each category, depending on how that specific item was actually produced.
- Treating "AI-assisted" and "AI-generated" as needing different categories. Etsy's own policy doesn't draw that line -- both fall under the same "Designed by a seller" category and the same disclosure requirement, whether AI produced the whole piece or contributed to part of it (a background, an edit, part of the wording).
No dedicated checkbox exists -- as far as this could be confirmed
Etsy's own public Open API v3 listing schema has no AI-specific checkbox or field of any kind -- checked directly against the schema, not assumed. The two verified mechanisms are exactly the two this article covers: the category choice (Made by / Designed by / Handpicked / Sourced), and a disclosure sentence written directly into the listing description. If you see a guide describing a dedicated AI-disclosure checkbox in Etsy's listing form, treat that as unverified and check Etsy's current listing flow yourself.