Officials in California’s Napa, Los Angeles, San Francisco and Sonoma counties have settled a consumer protection lawsuit for unlawful shipping delays with Shein.
The fast-fashion e-commerce company agreed to a settlement of $700,000, according to Napa County District Attorney Allison Haley. In the complaint that was filed in Napa County Superior Court, Shein allegedly engaged in unlawful business practices by not properly notifying customers of shipping delays or offering them refunds when their orders were not shipped on time.
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The court ordered Shein to pay a total of $700,000 in civil penalties and investigative costs. As part of the judgment, going forward Shein is prohibited from making untrue or misleading statements about the time it takes to ship or deliver products, and from violating laws related to the shipping delays. Shein “worked cooperatively” with prosecutors throughout the investigation, according to Haley’s office.
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A Shein spokesperson reiterated that in a statement Thursday and added that “while not admitting any liability,” the company has taken steps “to ensure our shipping and customer practices and communications comply with applicable law, including enhancing our internal processes to provide clearer, more complete information to customers regarding delivery timelines.” The Shein statement said “providing a great customer experience has always been and continues to be our top priority. We are fully committed to transparency, consumer satisfaction, and continually improving our operations to better serve our customers in California and around the world.”
Like its chief rival Temu, Shein is a platform that is based in Asia and ships an estimated 1 million packages to the U.S. each year, according to ShipMatrix. Shein is said to reach more than 700 million users each day globally. The company uses just-in-time inventory management, which allows it to place a small batch order if an item is out of stock. Shein stocks popular items in regional warehouses to try to ensure faster deliveries. Once orders are placed and packaged, shipping carriers handle the deliveries. Consumers are given tracking information to know the status of their deliveries.
Low prices and deliveries have helped Shein and Temu to upend the online shopping arena. Last month Bloomberg News reported that Target Corp. is looking into factory-direct deliveries, as big-box domestic retailers struggle to compete with the China-based juggernauts.
Per California law, orders placed online must be shipped within 30 days or sooner if the company promises an expedited shipment, unless a longer shipping time is indicated. If the products cannot be shipped within 30 days, the company must take additional steps, such as sending a notice, in order to inform the consumer of the expected length of any delays and offer them the opportunity for refunds.
The complaint alleged that Shein repeatedly failed to ship products within the required time frames, and the company did not provide the required delay notices, or offer refunds to its customers.
Haley said, “California consumers deserve to have the products they pay for delivered in a timely manner, and Shein repeatedly violated that trust by failing to offer refunds, when they couldn’t deliver on time. Our office is proud to join the district attorneys of Sonoma, Los Angeles and San Francisco to hold Shein accountable for their illegal business practices.”