This dialog between Etsy users and Administration would lead one to believe that if an item is featured on the front page, the shop has been vetted by Administration and is safe to buy from.
From the Jan. 15th Q&A, the question (emphasis added):
Once an item is “curated” for Browse, finds, Front Page, blogs does anyone look beyond the photo? I ask as there have been numerous selections where the items don’t adhere to the TOU’s for various obvious reasons and this is the face that you are putting on the site.
and Admin’s answer (in part):
Yes, every item that is curated by a member of Etsy staff goes through different measures of vetting checks before it’s featured. We vet to make sure the item and shop are in good standing with site policies to ensure a positive shopping experience. I can’t give specifics about the systems we use, for security reasons, but we have our own internal vetting process and are also in touch with the Marketplace Integrity Team…
In this December 15th blog post, Rusetsy pointed out a reseller shop (vibrantleathers) featured on the front page.
Yesterday, the shop (vibrantleathers) was called out in the forums for not fulfilling a buyer’s order, and the shop has now disappeared from Etsy.
Rusetsy thinks those Etsy fraud prevention teams are about as useful as an About page.