Temu has found itself in hot water again.
The New York Post reported that the U.S. Department of Homeland Security (DHS) is pursuing an investigation against the ultra-low-priced goods platform or potential forced labor violations.
The outlet stated that a senior official inside DHS confirmed the investigation.
The Post reported that the investigation centers around the Uyghur Forced Labor Prevention Act (UFLPA), which prevents goods made in whole or in part in China’s Xinjiang Uyghur Autonomous Region (XUAR) from entering the United States because of the presence of forced labor in that region.
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The legislation, which went into effect during President Joe Biden’s term in the Oval Office, has allowed DHS and Customs and Border Protection (CBP) to ban goods from certain companies from entering the U.S. via the UFLPA Entity List. While the government added 29 additional companies to that list this week, Temu, not its competitor Shein, have made the list.
However, if the results of the reported investigation show that Temu has, in fact, been violating the UFLPA, it—or its individual sellers and suppliers—could soon become part of the UFLPA Entity List.
A Temu spokesperson said the company takes a stance against forced labor on its platform.
“At Temu, we strictly prohibit the use of forced labor. We comply with the laws and regulations of every market we operate in and expect the same from our business partners and sellers. We reserve the right to end relationships with those who do not meet these requirements,” the spokesperson said.
Regardless of whether that happens, U.S. officials, consumers and advocacy groups alike have accused Temu of a variety of nefarious acts, from violating the UFLPA to violating users’ data privacy rights and more.
Earlier this year, a group of Republican lawmakers called upon the FBI and the SEC to disclose more details about what the agencies know about Temu, its business model and how it handles consumers’ data. In the letter the politicians wrote, they wrote, “We have concerns that the [Chinese Communist Party] has undertaken yet another attempt to exploit the democracy, free market principles and the personal and economic data of the United States.”
Before that letter was sent, the attorneys general of 21 states sent a letter to Chen Lei, CEO of PDD Holdings, Temu’s parent company, demanding answers about consumer data, forced labor and the company’s reported connections to the Chinese Communist Party (CCP). That inquiry came not long after the attorney general of Arkansas filed a privacy-centric lawsuit against the company.
In June 2023, the U.S. House Committee on the CCP reported that it was “all but guaranteed” that Temu was hawking goods made with forced labor to U.S. consumers because it does “next to nothing” to mitigate forced labor practices from entering its supply chain. The report found that, primarily, Temu relies on consumers or other concerned parties filing reports to flag a potential issue with Temu’s policies, though the company told the committee that it also does not expressly prohibit its sellers from listing goods that were made, in some part, in the XUAR.
While Temu and competitor Shein have caught the attention of a slew of regulators in the legislative branch, they’ve also made waves among those in the executive branch. President Biden has taken notice of the low-cost e-commerce apps’ effect on U.S. consumers, as well as the economy and legacy brands, and, partly at the behest of Congress, has begun to consider lowering the threshold for de minimis.
Should the Biden-Harris administration move the needle on the de minimis exception, which is a core tenet of how Temu and Shein remain successful in the U.S., the low-cost e-commerce players are likely to be a major reason for the action. Per the House Committee on CCP, neither Shein nor Temu paid any import fees in 2022, while legacy retailers like Gap paid about $700,000 in import fees.
According to a former official, Biden is expected to take action on the issue—which has become a bipartisan one—before the end of the year, though experts have questions over how difficult it could be for CBP and DHS to properly enforce a revised de minimis provision given the high threshold of packages that come in without added scrutiny every month.
DHS did not return Sourcing Journal’s requests for comment or confirmation of the investigation.
