Shein must fork over $700,000 as part of a settlement with California’s Napa, Sonoma, Los Angeles, and San Francisco counties because of what law enforcement describes as “unlawful shipping delays.”
California prosecutors unveiled the settlement on Wednesday, tying a bow around a complaint which alleged the fast-fashion giant broke the law by failing to properly notify consumers or offer them refunds when their orders failed to ship on time.
California state law requires that, unless a longer time is indicated, orders placed over the Internet must be shipped within 30 days or sooner if the company promises an expedited shipping timeframe.
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If the products cannot be shipped within 30 days, the company must take additional steps, such as sending a notice, which informs the consumer of the expected length of delay and offers the opportunity for a refund.
The consumer protection lawsuit alleges that Shein repeatedly failed to ship products within the required timeframes, or provide the required delay notices or offers of refunds.
“California consumers deserve to have the products they pay for delivered in a timely manner and Shein repeatedly violated that trust by failing to offer refunds when they couldn’t deliver on time,” said Napa County District Attorney Allison Haley, in a statement.
The civil complaint was filed in Napa County Superior Court against three companies tied to Shein’s U.S. operations: Shein U.S. Services, Shein Distribution Corporation and Shein Technology LLC.
In addition to the civil penalties and investigative costs, Shein is prohibited from making untrue or misleading statements about the time it takes to ship or deliver products, and from violating the laws relating to the shipping delays.
The suit seeks $600,000 in civil penalties, to be split evenly among the four counties, and $100,000 in investigative cost reimbursement for the Napa County District Attorney’s Office, which led much of the casework.
Shein worked cooperatively with prosecutors throughout the investigation, both parties confirmed.
“We fully cooperated with the investigation throughout and while not admitting any liability, have taken steps to ensure our shipping and customer practices and communications comply with applicable law, including enhancing our internal processes to provide clearer, more complete information to customers regarding delivery timelines,” a Shein spokesperson said. “We are fully committed to transparency, consumer satisfaction, and continually improving our operations to better serve our customers in California and around the world.”
Shein’s calling card has been producing thousands of quick-turn, low-cost SKUs daily, in small batches between 50 to 100 items. The frugal, on-demand model made the Singapore-headquartered and China-founded company an e-commerce giant almost overnight, but U.S. trade policy has forced the firm and top competitor Temu to rethink its approach to reaching American consumers.
In late April, both Shein and Temu hiked some prices ahead of the closure of the de minimis trade provision for goods out of China on May 2. That trade exemption enabled businesses like Shein to ship packages into the U.S. duty-free if the individual shipment cost less than $800. A U.S. Senate committee report released in 2023 indicated that Shein and Temu alone are likely responsible for more than 30 percent of all packages shipped to the U.S. daily under de minimis.
With de minimis officially closed, demand for Shein goods isn’t what it used to be—at least judging from third-party user data. Shein’s U.S. daily active users dropped 25 percent in May versus March, according to data from digital market intelligence firm Sensor Tower. Monthly active users declined 12 percent during the same stretch.
California’s consumer protection case is yet another exam of the fast-fashion giant’s common run-ins with U.S. lawmakers, who have previously raised concerns over the company’s labor conditions, environmental impact and alleged intellectual property theft.
The criticisms stretch internationally as well, most recently with France’s own consumer protection watchdog fining Shein’s European website and mobile operator 1.1 million euros ($1.3 million) for failing to disclose the presence of microplastics in more than 730 products.
