Happens *All* The Time
In fact just last week saw a local auction on CL for a Miele set that used a member's picture.
Personally I'd *flag* the auction on CL if I caught them using my photographs. I mean if they are using "fake" pictures, then how does anyone buying the item know what they are getting? Also how lame is it not spend time and money taking pictures of something you want shifted. In this era when even cheap cell phones have a digital camera, or one can purchase a disposable unit from a drug store, there really isn't an excuse.
Word to wise, in future one should watermark pictures posted in the group. While it may not prevent someone from lifting photographs, it will tell others whom the snap belongs.