Dive Brief:
- Temu is asking that a class action lawsuit accusing it of misleading consumers about the scope and reach of its data collection be moved out of the courts and handled instead through arbitration, according to documents filed last week.
- Attorneys for Temu say that the app’s terms and conditions state that users should individually mediate any dispute of Temu’s service and that users were given “sufficient notice” of these terms when they created a Temu account.
- Temu attorneys claim that the app’s terms specifically bar the plaintiffs from filing a class action lawsuit, and said plaintiffs “ignored this requirement when they filed this suit on behalf of a putative class of all Temu users.”
Dive Insight:
The motion to compel arbitration was filed on Feb. 9 and does not address the plaintiff’s alleged claims of data collection and misleading consumers. Instead, it focuses on the way these user disputes should be handled. Plantiffs also named Temu parent company PDD Holdings as a defendant in the initial lawsuit. Temu claims that this was an attempt to “skirt” the arbitration agreement, since PDD Holdings isn’t named in the terms. Temu argues that the plaintiffs’ claims against PDD are based on the premise that the parent company has an “alter ego” relationship with Temu.
The group of plaintiffs originally had until March 26 to oppose Temu’s motion, but in a separate court filing, the plaintiffs said entering a briefing schedule would be premature, given they may seek discovery, which would extend the timeline.
The initial complaint against Temu was filed in November 2023 in the U.S. District Court for the Northern District of Illinois. It alleges that Temu collects data “beyond what is necessary for an online shopping app,” including biometric information. It quotes experts who say that Temu can gain access to “literally everything on your phone,” and further alleges that Temu is able to read private messages, make changes to a phone’s settings and track notifications. At the time the lawsuit was filed, a Temu spokesperson said the company “strongly oppose[d] the allegations contained within it.”
Temu is facing a separate class action lawsuit, filed in September 2023, that alleges it failed to secure customers’ personal and financial data and also accused it of wiretapping the electronic communications of its website visitors. That case is ongoing, and attorneys for the plaintiffs are in the process of amending the initial complaint. The deadline for the amended complaint in that case is Feb. 19.
Temu has been boosting its advertising spending as it works to position itself as a household name in the U.S. Its ad in this week’s Super Bowl played multiple times throughout the game, a year after it made its U.S. advertising debut in the 2023 Super Bowl. A report from ad intelligence platform MediaRadar sent to Fashion Dive found that Temu increased its spending on advertising 1,000% year over year.
Despite this, the company has faced pressure from U.S. lawmakers and its fast fashion rivals. Temu and Shein are under congressional investigation over their compliance with the Uyghur Forced Labor Prevention Act. Temu sued Shein in December 2023, claiming Shein made Temu the “target of malicious and unlawful conduct intended to thwart [its] success.” Both companies had previously sued each other, but mutually agreed to drop those complaints.
