Etsy maintains an image as a site for goods made by artists and craftspeople, and buyers spend money there believing that they are getting something unique and handmade. Unfortunately, many items that violate Etsy's official guidelines are being permitted, to the point that consumer confidence is being damaged.
The most recent example (posted by Regretsy on April 21, 2012: http://www.regretsy.com/2012/04/21/the-etsy-featured-reseller-ecologica-malibu/) of a featured seller exposed as a reseller illustrates the lack of response on Etsy's part. As 4/22/12, Etsy had been able to respond to and close down numerous discussions about the issue but have yet even to suspend the seller or remove the featured seller blog post, despite damning evidence.
Even if Etsy does eventually shut this one seller down, it's indicative of a much larger problem. For a long time, Etsy members have been frustrated by the lack of response from Etsy when flagging obvious resellers. Even when accompanied by proof of reselling (by linking to wholesale sites containing the very same products sold as "handmade" on Etsy), flagging rarely results in anything being done.
Etsy buyers deserve to have confidence that their purchases are as described. Etsy sellers of legitimately handmade items deserve to have something done about unfair competition in the form of misrepresented items.
It is time for Etsy to demonstrate that they are taking this problem seriously and develop a solid plan for addressing it.
UPDATE 4/23/12: Etsy has now published a statement that they do not consider Ecologica Malibu to be a reseller, but a "collective." Please read the statement and decide for yourself if selling items ordered from a factory in another country is in the spirit of "handmade" that Etsy has promised us.
Etsy's statement: http://www.etsy.com/teams/7716/announcements/discuss/10182001/