Arkansas has become the first state to sue Chinese e-commerce company Temu for alleged data concerns.
Arkansas Attorney General Tim Griffin’s office filed the lawsuit last month in Cleburne County Circuit Court accusing Temu of violating the Arkansas Deceptive Trade Practices Act and the Arkansas Personal Information Protection Act.
“Temu is not an online marketplace like Amazon or Walmart,” Griffin said. “It is a data-theft business that sells goods online as a means to an end. …
“I have filed a first-of-its-kind state lawsuit against the parent companies of Temu — PDD Holdings Inc. and WhaleCo Inc. — for violating the ADTPA and PIPA. Though it is known as an e-commerce platform, Temu is functionally malware and spyware. It is purposefully designed to gain unrestricted access to a user’s phone operating system. It can override data privacy settings on users’ devices, and it monetizes this unauthorized collection of data.”
In the complaint, the state seeks an order enjoining Temu’s deceptive trade practices and violations of user privacy, imposing civil penalties and providing all other monetary and equitable relief to which the state is entitled. It seeks $10,000 fines for each violation of the Deceptive Practices Act.
“While this is the first state lawsuit against Temu over its deceptive trade practices, it is not the first time Temu’s tactics have been called into question,” Griffin said. “Apple suspended Temu from its digital app store in 2023, prompting multiple investigations into the company’s dealings, including an ongoing investigation being conducted by the U.S. Congress.
“Temu is led by a cadre of former Chinese Communist Party officials, which raises significant security risks to our country and our citizens. For my part, I will aggressively fight Temu’s efforts to profit at the expense of Arkansans’ privacy rights.”
In a response to an Arkansas television station, the company said it was “surprised and disappointed” Griffin’s office filed the complaint without what it called “any independent fact-finding.” It also said the allegations in the lawsuit are “based on misinformation circulated online, primarily from a short-seller, and are totally unfounded.”
Temu also said it would “vigorously defend” itself in the case.
“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 company said in a statement. “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’s parent company WhaleCo Inc. also faces at least three class action lawsuits. In one filed this spring in Massachusetts, consumers claim Temu sent text messages to phone numbers on the national Do Not Call registry.
And in one filed in September, customers allege Temu failed to secure personal and financial data. Another filed in November claims Temu misled consumers about its data access and collection while intentionally loading dangerous malware and spyware onto users’ devices.
Temu and Shein, another Chinese e-commerce company, are at the forefront of discount shopping that provide low-cost competition for Amazon, eBay, etsy and Walmart.
“Much of their growth, according to some industry experts, is the result of a trade loophole known as the de minimus exception, which allows for packages shipped from China valued at under $800 to enter the U.S. duty free,” a recent CNBC article states. “Amazon’s top public policy executive, Davi Zapolsky, says it’s an issue that state attorneys general should be asking about and added that the lack of scrutiny of China’s supply chain is a ‘concerning trend’ among U.S. and European officials.”
Currently, no other state attorneys general have filed legal actions against Temu or Shein.