FTC Files First INFORM Act Action, Temu To Pay $2 Million Penalty For Alleged Violations
Temu parent company Whaleco Inc. will pay $2 million to resolve allegations it violated the INFORM Consumers Act by failing to provide consumers with required information and tools to help them avoid and report stolen, counterfeit, or unsafe goods while shopping online.
This is the first action to enforce the INFORM Act, which has required online marketplaces to provide a way for consumers to report suspicious activity and to disclose identifying information for many high-volume third party sellers since 2023.
Liz Morton
According to the complaint, Temu allegedly failed to provide the proper means for consumers to report suspicious activity or when it did provide such a reporting mechanism it was difficult for consumers to access.
The FTC also claims that Temu failed to provide any reporting mechanism for product listings in its gamified shopping experiences, which allow shoppers to play games, spin wheels, earn coupons, and undertake other activities while browsing and purchasing products, until November 2024, and when Temu eventually did add a reporting mechanism, it was not clear and conspicuous as required by the law.
The complaint also alleges Temu failed to disclose clearly and conspicuously required information about third party sellers as part of its gamified product listings and for its mobile website.
The proposed consent order announced today addresses each of the INFORM Act violations alleged in the complaint. The proposed order, if approved by the district court, will require Temu to:
- Provide a telephonic reporting mechanism that allows consumers to listen back to, re-record, and accept any report before submitting it, and provide instructions in a way that consumers can easily hear and understand; and
- Disclose certain information as required under the Act—including electronic and telephonic reporting mechanisms and high-volume third party sellers’ names, addresses, and a means of contacting them—in a way that is easy for consumers to notice and understand. This includes making required disclosures for gamified product listings and for all versions of the Temu online marketplace including its smartphone app and desktop and mobile websites.
The proposed order also includes a $2 million civil penalty against Temu, which must be paid within seven days of the district court’s entry of the stipulated order.
The Commission vote to authorize the staff to refer the complaint and proposed consent decree to the Department of Justice was 3-0. The DOJ filed the complaint and proposed consent decree upon referral from the Commission in U.S. District Court for the District of Massachusetts, Eastern Division.
A Temu spokesperson provided the following statement: "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 case is UNITED STATES OF AMERICA v. WHALECO, INC., d/b/a TEMU Case No. 1:25-cv-12466 US DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS.
