Dive Brief:
- Fast fashion giant Temu is facing a consumer protection lawsuit brought by Attorney General of Arkansas Tim Griffin, according to court documents and a Tuesday press release.
- Griffin said in a statement that Temu wasn’t an online marketplace but instead “a data-theft business that sells goods online as a means to an end.” The complaint names Temu holding companies PDD Holdings and Whaleco and references reports stating that Temu collects users’ personal information without permission.
- A Temu spokesperson said in an email to Fashion Dive that the company was surprised and disappointed by the Arkansas attorney general’s office for filing the lawsuit “without any independent fact finding.” The spokesperson said the allegations were “based on misinformation circulated online, primarily from a short-seller, and are totally unfounded.”
Dive Insight:
The complaint, filed Tuesday in Arkansas’ Cleburne County Circuit Court, claims violation of the state’s Deceptive Trade Practices Act and Personal Information Protection Act.
The attorney general claims that Temu’s code is “purposely designed to evade front-end security review and to change its own code once it has been downloaded on a user’s phone.” The complaint said that this allows the app to exploit the user’s data.
Temu is facing two separate class action lawsuits over similar claims referenced in the attorney general’s complaint. The first, filed in September 2023, said that Temu failed to secure customers’ personal and financial data and accused the company of wiretapping electronic communications of its website visitors. The other, filed last November, claimed Temu collected data “beyond what is necessary for an online shopping app,” including biometric information such as facial characteristics, voiceprints and fingerprints.
The Temu spokesperson said the company categorically denied the allegations and would defend itself.
“We understand that as a new company with an innovative supply chain model, some may misunderstand us at first glance and not welcome us,” the spokesperson said. “We are committed to the long-term and believe that scrutiny will ultimately benefit our development. We are confident that our actions and contributions to the community will speak for themselves over time.”
Temu has surged in popularity after its U.S. launch in 2022. A recent report from marketing software company Omnisend found that people shop on Temu because of its prices, easy-to-use platform and frequent deals and discounts. In that study, 68% of respondents said they shopped on Temu. In the U.S., consumers said they were more likely to trust e-commerce giant Amazon (86%), while only 6% of respondents said they trusted Temu.
Still, some 17.5% of global respondents said they thought Temu could overtake Amazon as the leading e-commerce platform.
