Temu, one of the fastest-growing online marketplaces, has agreed to pay $2 million to settle allegations that it violated the INFORM Consumers Act, a law designed to protect buyers from counterfeit, stolen, or unsafe goods sold online.
The settlement, announced by the Federal Trade Commission (FTC) and the Department of Justice (DoJ), accuses Temu of failing to provide consumers with critical information and tools required by law to help them report suspicious sellers and avoid potentially dangerous products.
Regulators Cite Failure to Disclose Key Seller Information
According to the complaint, Temu did not adequately inform buyers about the identities of third-party sellers on its platform or offer a clear way for customers to report suspicious marketplace activity.
Under the INFORM Consumers Act, online marketplaces must:
- Clearly disclose product listings that identify the third-party seller.
- Provide a way for customers to contact sellers electronically or by telephone.
- Make reports of suspicious or fraudulent activity accessible to consumers.
The complaint stated that Temu “failed to implement these mechanisms” and did not disclose required information in a “clear and conspicuous manner.”
Consumer Protection Concerns and Past Safety Issues
Temu’s marketplace relies heavily on third-party sellers, which can make tracing product origins difficult. Regulators argue this lack of transparency increases the risk of counterfeit, faulty, or unsafe products reaching consumers.
This is not Temu’s first brush with scrutiny. The company previously came under fire for allegedly selling dangerous baby and toddler products in the United States, including items regulators described as “deadly” due to safety hazards.
By enforcing stricter compliance with the INFORM Act, the FTC and DoJ aim to ensure that customers can easily verify seller information and report unsafe products before they cause harm.
Settlement Imposes New Compliance Requirements
Beyond the $2 million penalty, Temu must now adopt new procedures to remain compliant with federal law. These include:
- Implementing a system for customers to report suspicious activity directly from product listings.
- Disclosing seller contact information in a way that is prominent and easily accessible.
- Ensuring all marketplace reporting tools are visible and functional for buyers.
Failure to comply with these requirements could expose Temu to additional penalties and enforcement actions.
