Arkansas Sues Chinese-Owned Temu for Alleged Deceptive Practices

A mobile phone displays the app of cross-border e-commerce platform Temu in Shenzhen, Guangdong Province, China, on Oct 28, 2022. CFOTO/Future Publishing via Getty Images

Arkansas has filed a lawsuit against Temu, one of the most popular online shopping apps in the United States, accusing the Chinese-owned platform of violating state privacy laws and engaging in deceptive trade practices. The lawsuit, filed on June 25, cites breaches of the Arkansas Deceptive Trade Practices Act and the Arkansas Personal Information Protection Act.

Temu uses low-cost Chinese-made goods to lure users into unknowingly providing “near-limitless access to their personally identifiable information,” according to the lawsuit.

The complaint further alleges that the platform is “purposefully designed” to gain unrestricted access to the phone’s operating system, including the camera, location, contacts, text messages, documents, and other applications.

“Temu is designed to make this expansive access undetected, even by sophisticated users,” the complaint reads. “Once installed, Temu can recompile itself and change properties, including overriding the data privacy settings users believe they have in place.”

The lawsuit claims that Temu “monetizes this unauthorized collection of data by selling it to third parties, profiting at the direct expense of Arkansans’ privacy rights.”

The lawsuit, filed in the Circuit Court of Cleburne County by state Attorney General Tim Griffin, lists Temu’s parent company, PDD Holdings Inc., and WhaleCo Inc., a subsidiary of PDD Holdings, as defendants.

A spokesperson for Temu told The Epoch Times in an emailed statement that the allegations in the lawsuit are “based on misinformation circulated online, primarily from a short-seller, and are totally unfounded.”

“We categorically deny the allegations and will vigorously defend ourselves,” the spokesperson said.

$10,000 per Violation

The complaint also alleges that the “discounted price” of Temu’s products is deceptive through false-reference pricing and that the company attracts and maintains users through “fraudulent means,” including by paying people to provide reviews, which “skews the reviews more positively.”

The plaintiffs are asking the court to impose civil penalties on Temu, including $10,000 per violation of the Arkansas Deceptive Trade Practices Act, and for the retailer to provide “all other monetary and equitable relief to which the state is entitled.”

Temu’s shopping app, which sells heavily discounted consumer goods, was introduced in 2022 and has since become one of the most downloaded apps in the United States.

However, the company has been plagued with criticism over alleged security and privacy concerns.

Announcing the lawsuit in a June 25 statement, Mr. Griffin also claimed that Temu is “being led by a cadre of former Chinese Communist Party (CCP) officials, which raises significant security risks to our country and our citizens.”

The Shein app on the app store reflected in the Temu logo, in Washington on Feb. 23, 2023. Stefani Reynolds/AFP via Getty Images

“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,” he said.

Temu Temporarily Banned From Apple Store

The e-commerce platform was suspended from Apple’s digital app store in 2023 because of alleged “misrepresentations” it made regarding the types of data the company can access or collect from users, including how it collects and uses the data, according to the lawsuit.

It was later reinstated and closed the year as the most downloaded free app on the Apple app store, Apple said in a statement at the end of last year.

Google also suspended Temu’s sister app, Pinduoduo, from its Google Play app store in March 2023 after malware was found on a Chinese version of the app.

The suspensions prompted multiple investigations into the company’s dealings, including an ongoing probe led by congressional lawmakers.

In an April 15 letter addressed to President Joe Biden, Sens. Tom Cotton (R-Ark.) and Marco Rubio (R-Fla.) requested information regarding Temu’s connection to the CCP.

Aaron Pan contributed to this report.