Arkansas Attorney General Tim Griffin is going toe-to-toe with Temu over “deceptive trade practices” and its handling of user data.
Amazon to Launch Discount Marketplace in Latest Ploy Against Shein, Temu
The former congressman is suing the Chinese e-commerce platform for allegedly stealing sensitive shopper data through its mobile app, violating the Arkansas Deceptive Trade Practices Act (ADTPA) and the Arkansas Personal Information Protection Act (PIPA).
“Temu is not an online marketplace like Amazon or Walmart . It is a data-theft business that sells goods online as a means to an end,” he said at a press conference on Tuesdsay. “Though it is known as an e-commerce platform, Temu is functionally malware and spyware.”
Griffin, who filed the first-of-its-kind state lawsuit against Temu parents PDD Holdings Inc. and WhaleCo Inc. in Cleburne County Circuit Court, accused the firms of designing an app that purposefully gains unrestricted access to users’ phone operating systems, overriding privacy settings. The groups then monetize the unlawfully pilfered data, he said.
The Temu app was first launched in the U.S. in 2022 and quickly gained a viral following that elevated its status to the most-downloaded app in the country the following year. American shoppers spent nearly twice as much time on Temu’s app as they did on Amazon’s in 2023, according to data from Apptopia. At the Super Bowl in February, the company shelled out tens of millions for a series of splashy ads that propelled its popularity further into the stratosphere.
The launch of Temu proceeded Pinduoduo ’s integration into the U.S. market—another popular app and shopping platform owned by PDD Holdings. But over the course of the past 12 months, security and privacy experts have begun to raise concerns about both platforms, citing red flags around their treatment of sensitive consumer data.
“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,” Griffin said, noting that “Apple suspended Temu from its digital app store in 2023, prompting multiple investigations into the company’s dealings, including an ongoing investigation being conducted by the U.S. Congress.”
Apple took action at the time because Temu misrepresented the type and volume of data it could access or collect from its users, which, as it turns out, was much more expansive than it initially disclosed. Examples include granular location data gleaned from GPS software and biometric data like user fingerprints.
Flexport Files Motion to Dismiss Peloton's D&D Fees Complaint
The suit asserted that the Temu app’s code was also designed to evade smartphone security reviews and to bypass phone security systems, potentially giving its operators access to phone settings and messages.
According to Griffin, such access is especially insidious because of the firm’s Chinese ownership and the fact that it’s subject to China’s laws surrounding data and intelligence. Regardless of any data protection guarantees that exist in the U.S., Temu is beholden to its government’s national intelligence institutions and cybersecurity regulators, the complaint read.
“Temu is led by a cadre of former Chinese Communist Party officials, which raises significant security risks to our country and our citizens,” Griffin said Tuesday.
The lawsuit is seeking an order against Temu’s deceptive trade practices and user privacy violations under the ADTPA and PIPA. It also seeks monetary relief for the state of Arkansas. “For my part, I will aggressively fight Temu’s efforts to profit at the expense of Arkansans’ privacy rights,” the attorney general added.
“We are surprised and disappointed by the Arkansas Attorney General’s Office for filing the lawsuit without any independent fact-finding,” a Temu spokesperson told Sourcing Journal on Thursday. “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.”
“We understand that as a new company with an innovative supply chain model, some may misunderstand us at first glance and not welcome us,” Temu added. “We are committed to the long-term and believe that scrutiny will ultimately benefit our development. We are confident that our actions and contributions to the community will speak for themselves over time.”
This article was updated to reflect comments from Temu.
'Significant Gap' Exists Between Consumer Wants and Brand Messaging on Cellulosic Fibers
Most Popular
Comments / 0