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Temu Lawsuit: 2024 Updates

Online shoppers may have heard about a Temu lawsuit, but the company actually faces several legal issues. We break them all down here.

evident Editorial Team
April 3, 2024
cybersecurity, data privacy

Online customers may be familiar with the fast-fashion retailer Temu, which recently entered the U.S. market. The company, owned by a large Chinese e-commerce parent company, broke onto the scene with a pair of Super Bowl ads in 2023.

But Temu has also been making headlines for a variety of legal issues the company is facing, ranging from damning Congressional reports to class action lawsuits relating to their data privacy and cybersecurity practices.

In this article, we'll break down the various legal issues that the company is facing, including the Temu lawsuit (or, more accurately, lawsuits plural) that have been filed recently.

Key Takeaways

What is Temu?

Temu is the U.S. operation of a Chinese e-commerce giant, Pinduoduo. Temu is relatively new to the U.S. market, having only been around since about September 2022, and it is still expanding into new international markets.

Temu's Better Business Bureau profile describes the company as "an online marketplace and the company name is WhaleCo, Inc. which is registered in Massachusetts as a Foreign Corporation through Delaware." The company is also often described as a fast-fashion retailer and exploded into many consumers' consciousness when they took out multiple Super Bowl ads in February 2023.

Temu Controversies (Separate from the Lawsuits)

Separate from the multiple lawsuits filed against Temu, the company has already been the source of some controversy and frustration from among its customers.

The BBB profile mentioned previously notes there have been over 1,700 BBB complaints in the past twelve months and over 2,000 complaints in the past three years. (Indeed, since those 2,000+ complaints occurred within a notably shorter timeframe, considering the company only began operating in September 2022).

According to one news report from March 2024, Temu's "[c]omplaints at the Better Business Bureau include poor quality and shipping delays, as well as misuse of customer information, which worries security experts."

Additionally, a Congressional interim report issued in June 2023 highlighted serious concerns about Temu's and Shein's, a fast-fashion competitor, business models and the likelihood of forced labor in their supply chains. The Chairman of the bipartisan committee that issued the interim report described their findings as "shocking: Temu is doing next to nothing to keep its supply chains free from slave labor."

And, as mentioned Temu is now facing multiple class action lawsuits on top of the numerous BBB complaints.

Temu Class Action Lawsuit: Streater v. WhaleCo, Inc.

telephone, vintage, monochrome

In May 2023, Tyler Streater, a resident of Oklahoma, filed a proposed class action lawsuit pursuant to the federal Telephone Consumer Protection Act and Oklahoma's Telephone Solicitation Act of 2022.

The complaint alleges that Temu:

  • "...engages in unsolicited text message marketing, including to individuals who have registered their telephone numbers on the National Do-Not-Call Registry, to those who have not provided [Temu] with their prior express written consent as required by the OTSA, as well as text message solicitations before the hours of 8 a.m. or after 8 p.m. and in excess of the OTSA’s twenty-four-hour limit, all in violation of the OTSA’s regulations."

The Oklahoma Telephone Solicitation Act took effect in November 2022, and the Temu lawsuit is actually the first lawsuit under the new law.

In a crucial 2024 Temu class action lawsuit update, Temu suffered a notable setback when the judge rejected the company's attempt to compel arbitration. The court cited a number of issues with Temu's website that led to the conclusion that customers did not accept the company's terms and conditions such that arbitration would be required.

Temu Cybersecurity Class Action Lawsuits

security, cyber, data

Among Temu's various legal issues, the Temu lawsuit making the biggest waves is Hu v. WhaleCo, Inc. This proposed class action lawsuit was filed in a U.S. federal court in New York. The allegations in the complaint center on Temu's "failure to secure and safeguard its customers’ personal data. . . enabling hackers to steal personal and financial data" of Temu customers.

The lawsuit alleges that Temu knowingly failed to comply with best practices for security protection and safeguarding customer data, stating that it "grossly failed to comply with security standards and allowed its customers’ financial information to be compromised, all in an effort to save money by cutting corners on security measures that could have prevented or mitigated the" data breaches.

The lead plaintiff, Eric Hu, seeks to represent himself and anybody in the U.S. who has registered an account with Temu since July 2022.

Temu Data Privacy Lawsuit: Specific Allegations

So, what specifically is this Temu lawsuit about?

In a section titled "Heritage of Malware," the lawsuit claims that the origins of Temu's cybersecurity malpractice stem from its parent company, noting that "Pinduoduo was pulled from Google’s app store due to the presence of malware that exploited vulnerabilities in the Android operating system to spy on users and competitors." The complaint alleges that the Pinduoduo app, according to cybersecurity experts, is malware and that when Google pulled the app from its app store, Pinduoduo engineers were reassigned to work on Temu.

Turning to Temu's conduct, the class action complaint alleges Temu "does not disclose and actively hide[s] the existence of spyware on Temu users on its browser and cell phone applications." The complaint goes into great detail about the specific mechanisms by which Temu invades customers' privacy and masks their behavior.

In short, though, a core aspect of the allegations is that the Temu app includes spyware that allows the company to track customers across other apps and aspects of their phone, and also allows Temu to access personal data ranging from customers' names and birth dates to their Social Security numbers.

The lawsuit alleges that Temu thus violates various privacy laws and caused customers to suffer damages due to the company's mishandling and misuse of customers' personally identifiable information.

Other Data Privacy Class Action Lawsuits

In addition to the New York lawsuit, the Hagens Berman law firm filed a similar class action lawsuit against Temu (and Pinduoduo, its parent company) in federal court in Illinois. Filed in November 2023, the Illinois lawsuit was actually filed before Hu v. WhaleCo, Inc. and makes similar claims in terms of reporting security vulnerabilities and deficient security protocols of Temu.

Given the widely publicized nature of Temu's deficient data protection mechanisms, it is likely that yet more lawsuits will be filed. For instance, it has been reported that a Canadian law firm also wants to file a class action lawsuit regarding Temu's data practices and allegations that customers' data was stolen.

Temu v. Shein: Lawsuits Between Competitors

chess, metaphor, board

Separate from the Temu class action lawsuits, the company also sued and has been sued by Shein, the other Chinese-based fast-fashion company implicated in the Congressional report regarding forced labor.

Shein sued Temu in March 2023, alleging that Temu enlisted social media influencers to make "false and deceptive statements" about Shein.

Meanwhile, in July 2023, Temu filed a separate lawsuit against Shein alleging violations of U.S. antitrust law.

Temu's lawsuit alleges that "Shein has engaged in a campaign of threats, intimidation, false assertions of infringement, and attempts to impose baseless punitive fines and has forced exclusive dealing arrangements on clothing manufacturers."

The Bottom Line

While the outcome of the lawsuits between Temu and Shein could certainly impact the dynamics of the fast-fashion market, American consumers are likely more concerned about the allegations and implications of the class action lawsuits alleging security vulnerabilities and data collection practices.

It is these Temu lawsuit updates that will likely generate the most interest as the various class action lawsuits unfold.