Chinese-founded fast-fashion retailer Shein has agreed to pay $100 million to settle an investigation by the US Federal Trade Commission (FTC) over delivery delays and other customer complaints, according to a source familiar with the matter. The settlement amounts to 44% of the company’s second-quarter profit. Shein, headquartered in Singapore, said it had reached a constructive outcome with the FTC and would share additional information soon. The FTC declined to comment.
The settlement comes as Shein faces growing regulatory and tax pressures in the United States and Europe, slowing its growth. The company’s shares have fallen 22% from their September 1 listing price as investors assess the impact of European Union fees on low-cost e-commerce parcels. According to Jefferies analysts, Shein’s app downloads across ten markets dropped 42% in September compared with the same month last year. The company had warned in its Hong Kong IPO filings in July that the US investigation could result in significant fines.
Shein also remains under investigation by the European Commission over illegal products sold on its marketplace. Last year, France’s data protection authority fined the retailer €150 million for improper cookie practices. The latest US action follows previous enforcement measures against online retailers over shipping issues. Fashion Nova was fined $9.3 million in 2020 for failing to meet delivery promises and offering gift cards instead of refunds, while Hey Dude, owned by Crocs, was fined $1.95 million in 2023 for failing to notify customers about shipping delays and suppressing negative reviews.
Pic Courtesy: google/ images are subject to copyright
