Etsy Sues Trade Group Over Cashmere Listing Disputes, Defends Section 230 Protections

Etsy has filed a lawsuit against the Cashmere and Camel Hair Manufacturers Institute (CCMI), seeking to affirm that the e-commerce platform is protected by Section 230 of the Communications Decency Act and not liable for potentially misleading cashmere product listings created by third-party sellers.

The legal action, filed December 22 in New York Southern District Court, represents the latest chapter in a years-long dispute between the online marketplace and the trade association representing cashmere manufacturers, wholesalers, and retailers.

According to court documents, CCMI has been scrutinizing Etsy’s cashmere offerings since 2020, when it began purchasing items labeled as “cashmere” from sellers on the platform and submitting them for laboratory testing. In 2022, CCMI claimed their testing revealed multiple products that did not meet federal Wool Products Labeling Act standards.

While Etsy initially removed flagged items, discussions between the companies broke down in September 2022 when, according to Etsy’s complaint, CCMI demanded the marketplace fundamentally change its business model by testing every item described as “cashmere” across its entire platform.

CCMI subsequently filed suit against Etsy, alleging violations of the Lanham Act, Massachusetts’ false advertising laws, and other legal claims. That dispute was settled in February 2023 with CCMI dismissing its action with prejudice.

However, Etsy alleges that CCMI has continued its testing campaign and renewed demands that the platform be held accountable for sellers’ product descriptions. In its complaint, Etsy states that CCMI most recently provided test results for three products on December 9, 2025, which it claimed contained no cashmere despite being advertised as such.

“Despite [Etsy’s] removals, CCMI continued to allege that Etsy was engaged in widespread false advertising involving cashmere-related listings and that it reserved the right to pursue all available legal remedies,” the complaint states.

At the heart of this dispute lies Section 230, often called “the 26 words that created the internet,” which states: “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”

This provision has historically shielded online platforms from liability for user-generated content, a protection Etsy argues is being threatened by CCMI’s demands.

“CCMI seeks to impose obligations and liability on Etsy that have no foundation in the law,” the complaint argues. “Even accepting CCMI’s allegation that independent sellers on Etsy have used the term ‘cashmere’ inaccurately in certain circumstances, under CDA 230, Etsy is expressly immune from liability for the sellers’ conduct.”

The timing of Etsy’s legal action is particularly significant as Congress considers potential changes to Section 230. Just last week, U.S. Senate Democratic Whip Dick Durbin (D-IL) and Senator Lindsey Graham (R-SC) introduced the “Sunset Section 230 Act,” which would repeal the provision two years after enactment.

The bill has drawn criticism from tech industry groups, including TechNet, whose executive council Etsy’s CEO Josh Silverman recently joined. TechNet President Linda Moore warned that repealing Section 230 “would create uncertainty, disproportionately harm entrepreneurs, and make it harder for startups and emerging companies to compete.”

Section 230 has faced growing scrutiny from both sides of the political aisle. Conservative critics argue it enables platforms to censor political viewpoints, while others contend it shields companies from accountability for harmful content and products on their sites.

E-commerce platforms like Etsy and eBay have successfully used Section 230 as a defense against liability claims. Earlier this year, eBay prevailed in a case brought by the Department of Justice on behalf of the EPA, which had sought to hold the company responsible for illegal chemicals and devices sold on its platform.

However, the emergence of AI-powered features on these platforms could potentially complicate Section 230 protections. When marketplaces use AI to generate product descriptions or recommendations rather than simply displaying seller-provided content, the legal boundaries become less clear.

As the case proceeds, it represents not just a dispute between Etsy and a trade association, but a broader battle over the future of platform liability in the digital marketplace.