Arkansas Attorney General Tim Griffin announced on Tuesday that his office is suing the Chinese mobile phone shopping app Temu for violating fraud and personal information laws, declaring the app “functionally malware” and a threat to America.
“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,” Griffin said in a statement, noting that Temu is “led by a cadre of former Chinese Communist Party officials, which raises significant security risks to our country and our citizens.”
The application, which has become one of the largest e-commerce companies operating in America in the span of two years, stands accused of violating the Arkansas Deceptive Trade Practices Act (ADTPA) and the Arkansas Personal Information Protection Act (PIPA).
Temu is a shopping app that offers a wide variety of extremely inexpensive products of dubious quality, shipped directly from China. It is a subsidiary of PinDuoDuo (PDD), a Chinese corporation known for its cutthroat e-commerce tactics of selling products at steep discounts to eliminate competitors, elbowing them out of the market. Like all Chinese companies, Temu is legally required to share data it gathers from customers or any other source with the Communist Party and, thus, with the People’s Liberation Army (PLA).
Temu is also implicated in China’s ongoing genocide of Uyghurs, Kazakhs, Kyrgyz people, and other ethnic Turkic peoples in occupied East Turkistan. A report by the House Select Committee on the Chinese Communist Party published in June 2023 concluded that there is an “extremely high risk” of obtaining products tainted by slave trade when shopping on Temu and fellow Chinese e-commerce app Shein.
The Arkansas lawsuit focuses on the threat of Americans’ personal data falling into the hands of the PLA through Temu, rather than the slave trade, as lawmakers have stated Temu appears to be selling slave-tainted products to Americans through a loophole in the Uyghur Forced Labor Prevention Act (UFLPA).
“Though it is known as an e-commerce platform, Temu is functionally malware and spyware,” Griffin, the Arkansas attorney general, said in a statement on Tuesday. “It is purposefully designed to gain unrestricted access to a user’s phone operating system. It can override data privacy settings on users’ devices, and it monetizes this unauthorized collection of data.”
In the lawsuit text, the state of Arkansas notes that “Temu is purposefully designed to gain unrestricted access to a user’s phone operating system, including, but not limited to, a user’s camera, specific location, contacts, text messages, documents, and other applications.”
“Temu is designed to make this expansive access undetected, even by sophisticated users,” it warned.
Griffin noted that Temu has long been plagued by accusations of mishandling personal data and vowed to “aggressively fight Temu’s efforts to profit at the expense of Arkansans’ privacy rights.”
The lawsuit is the first of its kind against Temu and could potentially prompt similar legal action in other states, as Temu’s practices are consistent throughout the United States.
Temu launched in America in September 2022 and sells products directly from China. Notably, the UFLPA went into effect in June 2022, which bans the entry of goods into the United States from occupied East Turkistan unless the importer can prove that the product has no ties to slave labor. While human rights advocates heralded the law as a positive step forward, it contained two major loopholes: products shipped from other provinces of China are not subject to the same scrutiny, and the law has an exception for packages worth less than $800.
As of December, the Wall Street Journal reported that the average Temu package has a value of $29.
The extremely cheap prices and a massive marketing campaign that included three Super Bowl ads have catapulted Temu to the top of America’s most popular apps. It was the most-downloaded application in America in 2023 – before the Super Bowl ads – and was responsible for a substantial part of the $8.4 billion in profits that PinDuoDuo reported in 2023.
Speaking to shoppers in Arkansas on Tuesday, the local Fox 16 KLRT network found most were hesitant to give up shopping on Temu despite the threat to their personal data.
“Sometimes I’m buying stuff I don’t really need but when it’s such a cheap price it’s kind of hard to pass it up,” one shopper, Stephanie Adcox, conceded.
Another shopper, Heather Wicker, told Fox 16 KLRT t hat her mother was “addicted to Temu” and that she did not believe the lawsuit would cut into Temu’s customer base because “all the other websites use personal information as well, so I don’t think it’ll stop anybody from shopping.”
Temu’s overwhelming popularity, and the apparent willingness of Americans to overlook concerns with its human rights record and data collection, featured prominently in a parody commercial for a fake Chinese e-commerce brand on Saturday Night Live in May, where the actors conceded they would keep buying the products.
Temu has also reportedly begun to reshape how American companies competing with it do business. In a report published on Wednesday, Forbes noted that American shopping giant Walmart is increasingly relying on cheap, dubious Chinese vendors for its online offerings.
“In April 2023, new Chinese sellers represented just 1.8% of all new sellers on Walmart Marketplace. By October 2023, that figure reached 24%, and by April 2024, it hit 73.8%, a record high,” Forbes reported, adding that Walmart confirmed the spike in Chinese sellers on the site, putting the company at risk of selling slave-tainted products, attributing it to “fairly new” Chinese “seller engagement efforts.”
