It is illegal to make the claim that your product will treat, cure or have any effect whatsoever on a disease or medical condition, unless you have gone through years of testing and the whole FDA approval process. That's why drugs cost so darn much.
It is true that dietary supplements or herbal preparations must include the following verbiage on their label- "This statement has not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease" but there are many other labeling restrictions that must be adhered to as well to avoid getting into trouble with the FDA. Even though you aren't ingesting the soaps or lotions, an active ingredient can still be absorbed through your skin. It's safer for your business to stay mute on what the ingredient is purported to do. If it were my business, I'd prefer to have Etsy contact me about these statements before the FDA does.
Food sellers are subject to the laws and health codes in their areas. It's not illegal to sell food, and nobody is saying that their cookies are going to cure cancer- just that they're yummy. How is buying food or treats from a seller online any different from buying them from a church or school bake sale?
Re-sellers do suck and they're totally violating the Etsy TOS, but what they're doing is not exactly illegal. They can be hard to spot, but sometimes it's really easy- for example if something is described as "handmade in Guatemala" but the shop is based in Ohio.
I'm glad that Etsy is making these changes, it shows that they're actually looking out for the best interests of both sellers and customers.
