The European Union’s Consumer Protection Cooperation (CPC) Network has determined that Shein has broken EU law by offering fake discounts, using pressure selling tactics, using deceptive labels, hiding its contact details and providing misleading information and sustainability claims.
The watchdog announced this week that it had notified Shein of its infractions and has mandated that it take measures to reform its business on the matters found to be noncompliant with EU consumer laws. The CPC Network has granted Shein one month to respond to its findings and offer up commitments for how it will rectify the issues identified by the investigation.
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From there, the CPC Network may go back and forth with the company to come to a satisfactory resolution. If Shein does not address the concerns brought forth in the action, it could face fines or other penalties, according to the announcement.
Michael McGrath, commissioner for democracy, justice, the rule of law and consumer protection, said the action shows that the CPC Network is committed to a level playing field for all companies doing business in the bloc.
“All companies reaching out to EU consumers must play by our rules. [This] action sends a clear message: we will not shy away from holding e-commerce platforms to account, regardless of where they are based,” McGrath said in a statement. “EU consumer protection laws are not optional—they must be applied in all cases. I strongly welcome the decisive action taken by the CPC network. It’s now time for Shein to step up, respect the rules and bring its practices fully in line with EU consumer standards.”
Shein did not immediately respond to Sourcing Journal’s request for comment, but reportedly told the BBC that it has been “working constructively with national consumers authorities and the EU Commission to demonstrate our commitment to complying with EU laws and regulations,” further noting that it is “continuing to engage in this process to address any concerns.”
The CPC Network noted that it will continue to investigate Shein on other issues, and it has requested further information from the company related to product reviews and third-party involvement with Shein’s site experience. The EU Commission is, separately, looking into Shein’s compliance with the Digital Services Act (DSA), under which it is classified as a Very Large Online Provider (VLOP), and, as such, is subject to the most stringent regulations outlined in the legislation. The DSA aims to mitigate the sale of illegal products and to guide providers toward further transparency. Competitor Temu faces similar scrutiny.
Shein and Temu—whose parent company, PDD Holdings, announced Tuesday that it had missed its Q1 earnings—may also be subject to trade changes in the EU. This month, Maros Sefcovic, EU trade commissioner, proposed a 2 euro ($2.27) flat tax on low-value parcels sent directly to consumers from outside the EU—primarily from China. The proposition comes after President Donald Trump, and subsequently, Congress, have targeted the U.S.’s de minimis exemption, causing potential issues for both Shein and Temu’s value propositions. The change is already taking its toll; PDD Holdings, Temu’s parent company, announced Tuesday that it had missed earnings amidst an unstable global trade environment.
Lei Chen, PDD’s chairman and co-CEO, said the company will continue to take a hyperlocal approach as it navigates changing regulations.
“Amid the rapidly changing external environment, our global business is working with merchants across regions to bring stable prices and abundant supply to consumers around the world. No matter how policies shift, we’ll continue to strengthen our operations in the markets we serve, helping more local merchants grow on our platform and enabling more orders to be fulfilled from local warehouses,” he said. “Right now, we are seeing these merchants becoming more proactive, with better-stocked inventory and more value passed on to consumers through differentiated products and services.”
If Sefovic’s proposal goes through, Temu may benefit—the tax would be lower on low-cost parcels inbound to warehouses than it would be on parcels sent from China to consumers; that is to say, if Temu sellers use the local warehousing structure the company has partnered with DHL to stand up in Europe, they would pay lower taxes on imports, allowing low prices to continue. Shein, meanwhile, uses on-demand manufacturing to create styles at a rapid clip for consumers, and thus ships much of its inventory straight to consumers from China. That approach would see the fast-fashion player, and other companies using the same model, paying the higher tax.
