EU watchdog finds Shein breached consumer laws

The latest findings are separate to the EU’s ongoing DSA probe into the online retailer.

The European Commission and the EU’s Consumer Protection Cooperation (CPC) Network has found that Shein has breached the region’s consumer laws.

According to the consumer protection watchdog, Shein employs a number of practices that breach EU laws. These include offering fake discounts on its website that pretend to offer better deals, putting pressure on consumers by displaying deadlines for ‘deals’ and using deceptive labelling to attract consumers.

In addition, Shein also provides false or deceptive information about the sustainability aspects of a product, displays incomplete and incorrect information about consumers’ legal rights to return purchased products and receive refunds – and even fails to process returns and refunds in line with those rights. All the while making it difficult for consumers to contact the e-retailer.

The CPC Network’s investigation of the e-retailer was led by relevant national authorities from Belgium, France, Ireland and the Netherlands under the coordination of the European Commission.

The Singapore-headquartered online retailer now has one month to respond to the findings and propose measures to amend its practices.

Depending on the its response, Shein could face enforcement, including a possible penalty based on the company’s annual turnover in the concerned EU member states.

As it continues to investigate Shein, the Network has also asked for more information from the e-retailer to assess its compliance with other EU consumer laws.

These measures include ensuring that Shein provides accurate product rankings, reviews and ratings, informs consumers about its contracts with third-party sellers and the changes to their rights if they purchase from third-party sellers.

“The action demonstrates our resolve to deliver a coordinated and effective enforcement response when e-commerce platforms and e-retailers don’t respect our laws,” said Henna Virkkunen, the EU executive VP for Tech Sovereignty, Security and Democracy.

Michael McGrath, the commissioner for democracy, justice, the rule of law and consumer protection at the EU said: “All companies reaching out to EU consumers must play by our rules.

“We will not shy away from holding e-commerce platforms to account, regardless of where they are based. EU consumer protection laws are not optional – they must be applied in all cases.”

Responding to the watchdog’s findings, a Shein spokesperson told SiliconRepublic.com that the company is “working constructively” with national consumer authorities and the EU Commission to demonstrate its “commitment to complying with EU laws and regulations”.

“Our priority remains ensuring that European consumers can have a safe, reliable, and enjoyable online shopping experience,” the spokesperson added.

In a separate investigation, the Commission began probing Shein last year over its compliance with the region’s Digital Services Act (DSA).

The DSA investigation, which is still ongoing, requested detailed information from Shein earlier this year on the measures it adopted to protect consumers and their data.

Last year, the Italian competition authority began probing Infinite Styles Services, based in Dublin, which manages Shein’s Italian website. That investigation is looking into possibly misleading statements made by Shein relating to its environmental and sustainability practices.

Online marketplaces employ several types of deceptive practices. These practices or ‘dark patterns‘ include tricking consumers through misdirection and hidden advertising to do things that they didn’t mean to, such as buying or signing up for something.

Prof Owen Conlan, a research lead at Adapt Research Centre, described dark patterns as something of “an online con artist”.

“Some of it can be deliberate activity to try and get more data from you,” he said, “and the other side might be just to try and upsell.”

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