Dive Brief:

• Investors have hit artisan marketplace Etsy with a class action after a report that fakes are rampant on the site, Bloomberg reports. 

• Investors are accusing the company of false statements and omissions regarding the extent of the problem.

• Etsy has declined to comment on the suit. Last week financial services firm Wedbush said that more than 5% of its offerings are fake or flout copyright or trademark regulations. 

Dive Insight:

Etsy’s shares have fallen since it was revealed that its issue with fake goods, which is no surprise to some extent, is actually quite extensive. The marketplace, which depends on its reputation for quirky, vintage finds and handmade goods, is now damned if it does crack down on fake goods, but damned if it doesn’t. That is, cracking down could damage sales, but not do so will clearly damage its claim to fame and raison d’être.