Whaleco, Inc., the operator of online marketplace Temu, has agreed to pay a $2 million civil penalty following allegations that it violated the INFORM Consumers Act of 2023. The Federal Trade Commission (FTC) alleged that Temu failed to provide consumers with required information and tools designed to help them avoid and report stolen, counterfeit, or unsafe goods.
“The INFORM Act is designed to ensure consumers have the information and tools they need to not only report suspicious activity to online marketplaces, but to directly identify and contact high-volume, third party sellers in many cases,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. “Temu, one of the most recognizable online marketplaces, is responsible for complying with the Act. Today’s action serves as a reminder to online marketplaces that violating the INFORM Act can result in serious consequences, including civil penalties.”
This enforcement marks the first action taken under the INFORM Act. The law requires online marketplaces to provide a reporting mechanism on product listings for all high-volume third-party sellers so consumers can report suspicious activity either electronically or by phone. It also mandates disclosure of identifying information about these sellers—such as their name, physical address, and contact details—to allow direct consumer contact.
The FTC complaint states that Temu did not offer any telephonic method for reporting suspicious activities and when such an option was provided, it was difficult for users to access. The agency further alleges that Temu did not implement any reporting mechanism within its gamified shopping experiences until November 2024. Even after introducing this feature, it reportedly failed to make it clear and conspicuous as required by law.
Additionally, according to the complaint, Temu neglected at times to clearly disclose necessary seller information on gamified product listings and its mobile website.
A proposed consent order has been announced addressing each alleged violation. If approved by a district court judge in Massachusetts’ Eastern Division, Temu will be required to establish a telephonic reporting system allowing consumers to review or re-record their reports before submission and ensure instructions are easy for users to understand. Furthermore, Temu must make all legally mandated disclosures—including those regarding seller identity and both electronic and telephone reporting mechanisms—clear across all versions of its platform: desktop site, mobile site, app, and gamified listings.
Temu must pay the $2 million penalty within seven days after entry of the stipulated order by the court.
The FTC Commissioners voted unanimously (3-0) to refer both complaint and proposed consent decree—which were filed by the Department of Justice upon referral from the Commission—to federal court.
According to standard procedure outlined by the FTC: “The Commission authorizes the filing of a complaint when it has ‘reason to believe’ that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Consent decrees have the force of law when approved and signed by the District Court judge.”
Tiffany Woo and Carl Settlemyer from FTC’s Bureau of Consumer Protection served as staff attorneys on this matter.
Consumers seeking more information about their rights under federal consumer protection laws or wishing to report suspected violations can visit consumer.ftc.gov or ReportFraud.ftc.gov.
