The Etsy Scam Costing Sellers Money in Minutes (And It’s Getting Worse)

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I’m exposing one of the biggest Etsy scams happening right now and it’s getting worse fast as AI tools become more advanced. Sellers are receiving refund requests backed by fake damage photos that look real at first glance but are completely AI-generated. This scam is hitting Etsy, eBay, and other marketplaces, and newer sellers are being targeted the hardest.

I walk through exactly how this scam works, show real examples of AI-altered images, and explain the subtle red flags most sellers miss. I also share a clear step-by-step protocol you can follow when a buyer claims an item arrived damaged so you don’t accidentally refund a scammer.

You’ll learn when to require returns, when buyers should pay return shipping, how Etsy’s buyer protection actually works, and how to protect yourself with listing policies, packaging proof, and smarter shipping practices. I also explain why pushing back professionally matters and how to handle cases when Etsy gets it wrong without panicking or shutting down your shop.

If you sell on Etsy or plan to, this is something you need to understand now before it costs you money.

#etsy #etsysellers #etsybusiness #onlineselling #ecommerce #smallbusiness

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00:00 The Biggest Etsy Scam Spreading Right Now
00:24 How AI Is Being Used to Fake Item Damage
00:45 Live Example of AI-Generated “Broken” Products
01:35 Real Refund Scam Example With High-Value Items
02:12 How to Spot Subtle AI Image Red Flags
02:55 The Exact Scam Prevention Protocol Sellers Should Use
03:43 What to Do When Damage Photos Look Fake
04:23 How to Push Back Without Escalating Conflict
05:17 When to Cover Return Shipping vs Buyer Pays
06:04 How Etsy’s $250 Seller Protection Actually Works
07:21 Why Sellers Quit Too Early and How to Handle Etsy Errors
08:40 Listing Policy Changes That Deter Scammers
09:27 Why New and Low-Sales Shops Are Targeted
10:12 Extra Proof Steps for Expensive Items
11:06 Final Warnings and Why This Scam Will Get Worse