The problem with reporting what may be stolen pictures is that only the actual owner of the pictures is allowed to report the theft. At least that's Ebay's rule and I'm sure other sites do the same. It's the same with any trademarked or copyrighted item. Even fake handbags and other items are technically reported to Ebay not by the member who reports the fake, but by the VeRO (Verified Rights Owner) member who represents the company whose trademark or copyright has been violated. Supposedly Coach's VeRO rep has to approve or deny every report of a fake Coach product that's sent to Ebay.
With photos that appear to be stolen you have to carefully study the history of both listings to figure out who the actual owner of the photos is, and then contact the owner and give them the information about the other listing. There are going to be times when a second seller may actually be using those photos with the first seller's permission - that's why only the photo owner can decide whether or not there was photo theft involved and if it should be reported. And of course there's always the possibility that the seller owns both accounts. Some sites allow that and maybe some don't. Frankly, as long as there's no evidence of fraud or illegal activity I don't see a problem although many resellers run at least two separate accounts so their buyers can't find out what the seller actually paid for the items they're reselling.
I think it is the wording from etsy that lead me to believe that I should report it, this is from their Dos and Don'ts:
"Having more than one account ("multiple accounts" or "alternate accounts") is not something Etsy encourages, as it has the potential to cause confusion. Keep in mind that information and accounts cannot be merged in any way, so if you change your mind later, you will not be able to transfer information (for example: listings, feedback, Favorites or purchase history) from one account to another.
All of your usernames must be clearly disclosed in the Public Profile for each account. A statement such as, "I am also on Etsy under these usernames..." would be acceptable. This includes all buying and selling accounts, as well as any collective accounts in which you are involved.
You may not use an alternate account to purchase items from yourself. This is called "shilling."
You may not list the same unique item in more than one shop on Etsy."
If I made a mistake in reporting it, than I stand corrected. I apologize for creating confusion.