Etsy's privacy Valdez: opt-out policy exposes users' real names and purchase histories - UPDATED

A recent, unannounced change to Etsy's privacy policy has created an avalanche of embarrassing disclosures for Etsy shoppers. Etsy hoped to make its service more Facebook-like and sociable, so it began to expose buyers' and sellers' real names, reviews,favorites and shopping histories. Among other things, this move has caused peoples' shopping preferences and histories to be linked to their real names in Google searches; according to one account, a shopper's sex-toy purchase appears on a Google search for her name "right after her online resumes."
Critics of Etsy's new policy seem to have a thing for searching for artisan dildos, but the point is pretty clear. Buyers have no idea that their purchases are being exposed, and they don't need to be embarrassing purchases to cause problems. We're reminded of the fallout from Facebook Beacon, the tool that allowed Facebook to show users' off-Facebook activities and purchases without their consent or knowledge. Facebook offered an opt-out for the service, but the damage was already done. Facebook eventually faced an FTC complaint and a class-action lawsuit--Facebook settled the suit in 2009 by shutting down the service and donating $9.5 million to an organization that fights for online privacy.

With this move, Etsy has hopped onto the Beacon roller coaster, and it may be too late to get off. By automatically opting in every user ever registered to the new system, Etsy is likely just one especially outraged user away from facing its own set of lawsuits and FTC investigations.

Update: Etsy CEO Rob Kalin responds in the comments:

What happened? Purchases are made visible via our feedback system, which has not been changed in almost six years. As part of building a trust score on Etsy, buyers leave feedback for sellers and vice versa. We've always linked to the item purchased when feedback is left.

Lots of people on Etsy have identifiable usernames. Many include their real name, or are a recognizable public persona. We saw this, and we also wanted to deepen the trust relationship between buyers and sellers, so we gave all members the option to enter their real name. We feel that being who you really are is an important part of trust on the Web.

We created the option for real names in mid-October. Since then, nothing around this issue has changed. If you put your real name in Etsy, bought stuff, and received feedback, it'd link to the item you bought. Google would also index this stuff.

Did we make a mistake here? Yes, and we worked till late in the night yesterday to take a step in the right direction and plan our next steps: https://jira.etsycorp.com/confluence/display/product/Rethinking+feedback+II

Etsy users irked after buyers, purchases exposed to the world (Thanks, Sethum, via Submitterator!)