Shein slapped with high fines in California, France

Chinese ultra-fast fashion giant Shein needs to have deep pockets these days, given that the global e-commerce company is being slapped with fines in two countries at the moment.

Shein just settled a consumer protection lawsuit in the United States, in California’s Napa, Los Angeles, San Francisco and Sonoma counties, and agreed to pay 700,000 US dollars (almost 600,000 euros) in civil penalties and investigative costs.

Shipping delays cost Shein dearly in California

The complaint alleges, among other things, that Shein “engaged in unlawful business practices by failing to properly notify customers or offer them refunds when their orders were not shipped on time”.

California law requires that orders placed over the internet must be shipped within 30 days – sooner if the company promises expedited shipping or later if a longer shipping time is indicated. If a company fails to ship products within 30 days, it must take steps such as sending a notice informing consumers of the expected length of delay and offers refund opportunities for a refund.

According to the complaint, Shein “repeatedly failed to ship products within the required timeframes, provide the required delay notices or offer refunds to its customers”.

“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 could not deliver on time. Our office is proud to join the District Attorneys of Sonoma, Los Angeles and San Francisco to hold Shein accountable for their illegal business practices,” commented district attorney Allison Haley in a press release on Wednesday.

As part of the judgment, Shein is also prohibited from “making untrue or misleading statements about the time it takes to ship or deliver products and from violating laws related to the shipping delays”.

In a statement made on Thursday, a Shein spokesperson confirmed that the company had 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,” however, not admitting any liability.

Million-dollar fines in France

Compared to two fines amounting to 190 million euros (around 220 million US dollars) in total that have been levied against the Singapore-based company in France, the California fine may seem like loose change.

While France’s competition and anti-fraud agency DGCCRF (Direction Générale de la Concurrence, de la Consommation et de la Répression des Fraudes) confirmed fining Shein 40 million euros (around 47.17 million US dollars) over deceptive business practices last week, the country’s data privacy regulator CNIL (Commission Nationale de l'Informatique et des Libertés) has recently slapped the company with a recommendation for a 150 million (around 174 million US dollar) fine for violating laws governing the use of digital trackers used for targeted advertising, commonly called ‘cookies’.

The DGCCRF has accused the e-commerce giant of “deceptive commercial practices”, specifying after a year-long competition inquiry that it misled customers on discounted prices and on its environmental impact. Specifically, it found that Shein was raising prices before lowering them, thus giving consumers a false sense of a price deal.

The agency probe found that 11 percent of advertised discounts were actually price increases; 57 percent offered no price reduction and for 19 percent, the price drop was less significant than advertised.

Misleading discounts and cookie policy stumbling blocks for Shein in France

While the antitrust agency confirmed that Shein has accepted the fine, CNIL’s final decision is still pending and expected to be announced in the coming weeks. 

The allegations go back to an inspection almost two years ago, on 10th August 2023, during which CNIL found that Shein’s website installed advertising cookies without obtaining users’ consent first or being unclear and misleading about it. According to a rapporteur, “even when users opted out, cookies requiring consent were still being stored and read.”

While the proposed 150 million euros seem steep, the amount has come down from a proposed fine of 100,000 euros (116,000 US dollars) for every day that the website flaws persist. However, given recent steps by Shein to comply, a per-day amount is no longer pursued. Shein’s attorney Sonia Cissé has criticised the proposed fine as “completely disproportionate” according to AFP.