Officers went to the home of Charles Traynor, from Glasgow, after another enthusiast claimed he had failed to send the toys he had bought online.
Mr Traynor was taken into custody, photographed, fingerprinted, and had his DNA taken.
When he started to feel unwell and asked for his medication, it was refused.
The 51-year old, who had never been in trouble with the police, told officers the buyer had refused to pay the postage amount of £6 and he held back sending the items.
When he was eventually released, they refused to return him to his house.
Ebay said Mr Traynor was not at fault. The charges were eventually dropped – after over a year.
Police Scotland only apologised for its actions following the findings of an independent investigation.
Father-of-five Mr Traynor, a joiner, described the reaction of police during the incident where he was suspected of online fraud on 27 May last year as ‘farcical’.
Charles said: “It’s difficult to know what’s worst about this whole saga.
“The way I was treated by the police, or the waste of taxpayers’ money and police man hours investigating the sale of three Dinky toys. It’s farcical really.
“I’d say the cost of this shambles must run to tens of thousands.”
He put the three Dinky car models up for sale after a clear-out of his home, asking for £16 plus postage and packing. The buyer transferred £16, but complained the extra £6 was too much.
Mr Traynor said: “There was no mark up, that’s what it was going to cost me. He paid me the £16, we discussed the extra cost, and then it went quiet.
“The next thing I knew he’d complained to the police that I hadn’t sent the cars and they were at my door.”
He said he explained he was on medication, but the officers decided to take him to the station.
He added: “After the interview, in which I was told I’d no need for a solicitor, I had my fingerprints, DNA, and photographs all taken.
“Then I had my shoes and belt taken from me and I was put in a cell.
“My head was beginning to hurt, which is the symptom I get when I’ve not taken my medication. When I asked again about getting my pills, I was basically told tough’.
“I’ve no previous convictions. I’ve never been arrested. And yet I was put through all of this for the sake of three Dinky toys. I was also cleared by eBay of doing anything wrong.
“Four hours after I was lifted, they threw me out in to the street and I had to walk home.”
Mr Traynor to Police Scotland, but he claims he was given the brush-off.
He put the matter in the hands of the Police Investigations Review Commissioner, who upheld three of his six complaints and made a number of recommendations to Police Scotland.
Chief Inspector Andy Hutton wrote: “I apologise unreservedly for any distress or frustration you have been caused and please be reassured that it is Police Scotland’s policy to deliver the highest standard of service at all times.”
Scottish Conservative MSP Alex Johnstone said: “It appears the police over-reacted hugely to this allegation.
“Quite how anyone could conclude the £16 sale of Dinky toys warrants this level of attention is beyond me.
“The fact he says he was denied medication makes the flashpoint all the more regrettable.”
A Crown Office spokeswoman confirmed the case had been dropped, adding: “After careful consideration of the facts of the case, we have decided there should be no proceedings taken at this time.”
A spokesman for Police Scotland said: “These recommendations have all been addressed by Police Scotland. All of the involved parties have been kept informed throughout this process.”