I have not yet seen this specific subject: I note that most people post photos with their work, but there is also a caveat when you submit that you must have the copyright holder's permission to post their photos. How do writers handle this? Is everyone going around posting their own photos or getting a copyright holder's permission to post a photo with their work?
In the terms when creating a membership Lush states that all image posting is the responsibility of the member. If a copyright owner of a photo contacts us and asks for it to be remove, the image is removed. In addition, if a copyright or watermark is in the image, we encourage the author to remove it unless it was purchased by them or given to them for their personal use.
As I mod, I've removed a ton of images from a story if the cover image is inappropriate or has a visible watermark. It's not something that is a problem.
Thanks, Coco - useful to know!