Chinese e-retailer Shein appears to be adopting a similar strategy to younger rival Temu, which recently came under fire for offering cash giveaways in exchange for permanent access to extensive personal customer data.
Fast-fashion giant Shein has launched a number of promotions on its app, such as “magic draw”, “draw easily”, “free gift”, and “spin to win”. These giveaways promise rewards like “10 free gifts” valued up to $800 and up to £300 worth of Shein credit.
But to access the “gifts”, customers must sign up for the app and hand over personal data, which could be transferred outside the UK, including to China.
Under Shein’s privacy policy, a clause about the transfer of personal data states: “When you access or use our Services, your personal data may be processed or transferred outside the United Kingdom, including to the United States, the European Union, China, and/or Singapore.
“Such countries or jurisdictions may have data protection laws that are less protective than the laws of the jurisdiction in which you reside.”
Shein’s track record in data protection has been marred in the past. In 2022, Zoetop, the owner of Shein and its sister company ROMWE, faced a $1.9m fine from New York State. It came after an inquiry into a 2018 cyberattack, which compromised the personal information, including credit card details, of 39m accounts.
City A.M. has approached Shein for comment.
Last month, Temu launched a cash giveaway, offering new customers £50 if they signed up, downloaded the app, and shared an invitation code.
Its terms and conditions initially required them to permanently sign away personal data including their “photo, name likeness, voice, opinions, statements, biographical information, and/or hometown and state for promotional or advertising purposes in any media worldwide” without being notified when it is used.
Temu had said these terms were “standard” but it later tweaked them because they were “overly broad”.
The company denies that it sells user information. A spokesperson said: “The use of giveaways is common to companies across numerous industries, including competitors like Shein, whose current promotions include nearly identical terms and conditions.
“Temu gathers user information solely for the purpose of delivering our service and to enhance customer experience.”
The UK’s data watchdog, the Information Commissioner’s Office (ICO), has said it is continuing to consider the concerns raised.
An ICO spokesperson said: “Organisations must be clear and transparent about how and why they collect and use people’s personal information, and ensure people can make a fully informed decision as to whether to hand over their data.
“We always urge people to be vigilant when providing their personal information online, and if anyone has concerns about how their information is being used, they can get in touch with the ICO or check our website for advice and support.”
Although based in China, Temu and Shein would be caught by UK and EU GDPR rules by offering goods or services to individuals in those markets. Breaches of these regulations can result in a fine, which can be up to four per cent of global turnover.
Both the Chinese-owned online marketplaces are known for selling outrageously cheap products and outpacing competitors like Zara and H&M. Shein’s tagline is “Save money. Live in style!”, while Temu’s is “Shop like a billionaire”.
But their ability to sell products including clothes, accessories and homewares for rock-bottom prices has raised questions around controversial practices.
A US investigation has found Temu’s products have an “extremely high risk” of forced labour in the US, although it says it is not responsible for third-party sellers using its platform.
Shein is also reportedly facing close to 100 lawsuits accusing it of copyright infringement, allegations which it denies.
The company is currently hashing out plans to go public, with considerations for a listing in New York or London. Concerns over its links to China have unsettled US lawmakers, with Senator Marco Rubio warning it “is subject to the whim of the Chinese government, and by extension the Chinese Communist Party.”
Founded in China and later relocating its headquarters to Singapore in 2022, Shein has expanded rapidly through aggressive marketing, particularly on social media platforms like TikTok, where users often showcase their purchases.
Temu, launched in the US in 2022 and then in the UK the following year, has similarly experienced explosive growth.