A viral beanie on Etsy has ignited confusion as AI knockoffs are now infiltrating the site's handmade offerings.
Here's what to know
Hobart crochet artist Lucy Cooper put her spiral beanie pattern on Etsy, drawing heavy attention online. Cooper said the design came from researching granny-square styles and turning one into a hat with a 1990s surfwear feel. More than 100 people from around the world, including the United Kingdom and the United States, messaged her about it.
According to ABC News, purchasers began telling Cooper the instructions were nonsensical and failed to produce the beanie, which led her to discover another Etsy store selling an AI-generated version of her pattern with AI-made product images.
When ABC tested images from two separate products with an AI-detection service, the tool rated them 97% "fake." The seller was still offering 67 products and had recorded 720 sales.
Cooper said the discovery felt belittling because of the amount of work she had put into the design. "There's a big difference between being inspired by something and completely copying it without someone's permission," she said.
More background
Cooper is not the only artist facing this problem.
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A U.K.-based wall-art creator Lune Club (@luneclubstudios) said in one Instagram post, "AI tech has made it so easy to copy someone else's work at the click of a button, and then real artists are left to compete with cheaper AI-generated versions of their own art."
Separately, rug maker Lora (@lm.rugs) wrote in a post, "I'm genuinely disappointed that Etsy allows this. I'm seeing more and more artists being ripped off, and it's not okay."
Some social media influencers have also openly encouraged the tactic on Etsy. One influencer, Ivy Biel (@ivy.system), made an Instagram post with a caption that said, "I made [this print] in about 12 minutes using AI. No Photoshop. No Canva. No design skills … That one file now covers my rent."
Frustrated shoppers have also taken to Reddit with threads titled "Got Scammed by AI pattern" and "Etsy has become an AI dropshipping wasteland," as buyers run into the same confusion.
What's being done?
The company says deceptive uses of AI are already prohibited under its current rules.
James Ossman, Etsy's vice president of customer operations, told ABC that the company's standard is "centered on human creativity" and that sellers can use AI as a tool, "but not to deceive buyers, misrepresent an item, or copy the work of others."
He also said moderation is difficult at Etsy's scale and that the company is still refining how it identifies and removes listings that do not belong on the platform.
The Australian policy fight over AI and copyright remains unsettled. In October 2025, the federal government rejected an exemption that would have let AI firms train on Australian creative works, but a leaked proposal outlined reforms allowing those companies to use material found online unless creators opted out.
Melbourne-based law professor Jeannie Paterson said those developments still leave the legal boundary around AI-generated outputs unclear. She said feeding an artwork into an AI program and asking for a variation could infringe copyright, though the law is not settled.
Paterson said, "We need clarity for artists on what their rights are in the AI age, and also clarity on how they can pursue and enforce those rights."
Where can I learn more?
These articles dig further into the tensions around AI, creative work, and trust in online and fashion marketplaces.
• After remaking a Shein crochet garment, one designer was just in shock.
• Creators were warned that copyright claims could vanish if they miss the current filing window.
• Across the music industry, human artists are losing staggering sums as AI slop spreads.
• In Australia, new AI rules would protect creators' work while matching data-center power use.
• Fashion brand Mango faced backlash after replacing human models with AI-generated images.
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