Whaleco, Inc., the corporate entity that operates Chinese-direct marketplace Temu, will pay a $2 million civil penalty to resolve allegations that the platform violated the INFORM Consumers Act of 2023. The Federal Trade Commission (FTC) charged that Temu failed to provide consumers with the information and tools needed to help them avoid and report stolen, counterfeit or unsafe goods while shopping online.
“The INFORM Act is designed to ensure consumers have the information and tools they need to not only report suspicious activity to online marketplaces, but to directly identify and contact high-volume third-party sellers in many cases,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection in a statement. “Today’s action serves as a reminder to online marketplaces that violating the INFORM Act can result in serious consequences, including civil penalties.”
According to the complaint, Temu failed to provide any telephonic means to report suspicious activity, and when the platform did, it was difficult to access. Temu also allegedly failed to provide any reporting mechanism for product listings in its gamified shopping experiences until November 2024, and when it did so, the mechanism was not clear and conspicuous, as required by law.
Both Temu and its rival Shein have been under scrutiny by U.S. government agencies for their business practices. In September 2024, two Commissioners at the U.S. Consumer Product Safety Commission identified both companies by name in their call for investigations into foreign-owned ecommerce sites. The sharper scrutiny follows allegations that Shein and Temu sell potentially dangerous items such as crib bumpers (illegal in the U.S. since 2022) and drawstring hoodies that present a choking hazard.
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Remedies Include Clear Reporting Channels for Consumers
If approved by the U.S. District Court for Massachusetts, a proposed consent order would require Temu to provide telephonic reporting mechanisms that allow consumers to listen back to, re-record and accept any report before submitting it. Temu would also need to clearly and conspicuously disclose high-volume third-party sellers’ contact information, including for gamified product listings. The decree would apply to all versions of Temu’s marketplace, including its app, desktop and mobile sites.
Temu appears ready to make the changes needed to put it in compliance with the law. The company began working with Eurofins Consumer Product Testing in April 2025 to enhance transparency and help ensure that products sold on the platform meet legal and regulatory standards.
In a response to the announcement of the $2 million civil penalty, Temu gave the following statement in a response provided to Retail TouchPoints: “Throughout the FTC’s investigation, we worked closely with the agency, studied its feedback carefully, and made substantial efforts to address the issues identified. It was a rigorous undertaking, but we believe such scrutiny and dialogue are ultimately constructive for our long-term development. We will continue striving to uphold high standards and to be a responsible corporate citizen in the United States.”
The fine is another blow for Temu, which, along with its China-direct counterparts, has experienced a sharp decline in shoppers and sales in the wake of President Donald Trump’s fluctuating tariff policies. In particular, the removal of the de minimis loophole has caused upheaval for these platforms, which relied on the import fee exemption for international orders under $800 to keep their prices low.
