Shein Settles $100 Million FTC Probe as Regulatory Pressure Intensifies
By Helen Reid and Jody Godoy
Shein Faces Regulatory Scrutiny and Financial Penalties
FTC Investigation and Settlement Details
LONDON, Oct 23 (Reuters) - Chinese fast-fashion giant Shein has agreed to pay $100 million to settle an investigation by the US Federal Trade Commission over delivery delays and other customer complaints, a source with direct knowledge told Reuters on Friday.
The settlement, equivalent to 44% of Shein's second-quarter profit, is the latest to hit the online fast-fashion retailer facing a regulatory and tax crackdown in Europe and the US that has slammed the brakes on its growth.
Company Response and Ongoing Investigations
Shein, founded in China though headquartered in Singapore, said in a statement to Reuters that it had "reached a constructive outcome with the FTC", and that additional information would be shared soon. An FTC spokesperson declined to comment.
The company had warned in July filings for its Hong Kong IPO that the US probe could lead to significant fines.
Consumer Complaints and Delivery Issues
Consumers filed more than 12,000 complaints about Shein over more than $11 million in purchases between January 2020 and June 2026, according to FTC records reviewed by Reuters.
At least some of those relate to shipping, with customers reporting to the FTC and Better Business Bureau that they never received packages that Shein had marked as delivered, and that Shein customer service did not resolve the issue.
Reuters was not able to independently verify the substance of the complaints, or whether they were ultimately resolved.
Marketplace Operations and Third-Party Sellers
As well as selling its own-brand clothing, Shein's website also operates as a marketplace where third-party sellers offer everything from toys to household appliances and decor.
Impact of European Regulatory Changes
Increased Fees and Tariffs in the EU
MORE PAIN AHEAD FOR SHEIN WITH HIGHER EU FEES
Shein shares have already dropped 22% from their September 1 listing price as investors realised the extent to which the European Union's €3 fees on low-value e-commerce packages have bruised its business there.
And there's further pain ahead for Shein, with the EU imposing an additional €2 handling fee from November 1, making the total fee €5 per separate customs code.
Business Model Adjustments and Price Increases
"The way these tariffs are implemented is extra punishing for Shein," said Mike Ryan, head of e-commerce insights at Smarter Ecommerce, who has tracked how Shein has dialled down its spending on Google Ads visibility in Europe.
Shein was known for selling $5 dresses and $10 jeans, but has been forced to raise its prices as the US and then Europe closed customs duty loopholes.
CEO Sky Xu said last month that Shein would develop more higher-priced brands in an attempt to boost profitability.
Ongoing Legal and Regulatory Challenges
Shein is also still under investigation by the European Commission over illegal products on its marketplace. It was fined €150 million ($168 million) by France's data protection authority over the improper use of cookies last year.
FTC Actions Against Other Online Retailers
It's not the first time the US FTC has taken action against online retailers over deliveries.
US firm Fashion Nova was fined $9.3 million in 2020 for failing to meet shipping promises to customers and giving them gift cards instead of refunds.
Crocs Inc-owned Hey Dude was also fined $1.95 million in 2023 for failing to notify customers of shipping delays and suppressing negative reviews.
($1 = 0.8928 euros)
(Reporting by Helen Reid in London and Jody Godoy in New York; Editing by Adam Jourdan and Jan Harvey)
