US regulator starts investigation into Shein and Temu

Shein and Temu have grown in popularity in recent years. As of last year, Shein had an estimated 88.8 million active shoppers, while Temu has approximately 167 million users globally. 

However, these budget-friendly retailers are now under scrutiny by the U.S. Consumer Product Safety Commission (CPSC). The agency is focusing on how these companies can offer such low prices while complying with the Consumer Product Safety Act.

The investigation stems from a report by The Information, which shed light on potentially hazardous baby items sold on Shein and Temu. These include crib bumpers that have been banned by Congress and hoodies with drawstrings, both of which pose choking and strangulation risks, yet remain available on the platforms.

Additionally, both companies may be taking advantage of a loophole known as the “de minimis” rule. This regulation exempts packages under $800 shipped directly to U.S. consumers from paying tariffs, which reduces costs for sellers and buyers alike.

While these practices benefit customers with cheaper prices, the CPSC says that its main objective is to ensure that safety is not compromised.

In a joint statement, Commissioners Peter A. Feldman and Douglas Dziak voiced concerns specifically about the safety of certain baby products sold by Shein and Temu.

The statement says: “As the Commission sets its priorities for next year, we expect agency staff to investigate the companies’ safety and compliance controls; relationships with third-party sellers and consumers; and any representations they make when products are imported. 

We are aware of recent media reports that deadly baby and toddler products are easy to find on these platforms,. We are also aware of reporting that ‘thousands of Chinese factories and vendors have joined the supply chain for Shein and Temu, whose popularity has exploded in the U.S. with their offers of inexpensive made-in-China goods, from t-shirts and handbags to electronics and kitchen items. 

Third-party sellers, domestic and foreign, are proliferating on online platforms. This form of commerce can benefit consumers and sellers in many ways, but CPSC must make clear its expectations regarding these platforms’ responsibilities to ensure safety. We expect this review by Commission staff will inform what further steps are needed to protect American consumers.”