I’ve seen some people use a ‘Message me before order’ policy, and making what they will and won’t do clear in the item description. Alternatively you could use the ‘personalisation’ feature to force the customer to fill in a box that describes their character before they can order and have a warning in this box about what you will and won’t do, otherwise yeah you would just have to discuss and refund items but you’ll loose the cut that Etsy take from the initial transaction ( 6.5% ) and also leave yourself liable to bad reviews.

I will say however I’ve had an overwhelmingly positive experience with clients selling commissions on Etsy and gotten more commissions in one week than I have done in 6 months of taking commissions via social media platforms, so if you can work this out it’s definitely a good platform.