Temu Agrees to Data Privacy Restrictions in Settlement of Texas Lawsuit

Chinese online retailer Temu has agreed to settle data privacy claims brought by Texas and restrict how it handles shoppers’ personal data in the state.

 

Temu faces several lawsuits from US states concerned that the company unlawfully collects American users’ data, which could potentially be accessed by the Chinese government. Texas is the first state to resolve its claims against the retailer. It is also the first time Temu has agreed to keep personal data on US servers and limit the circumstances in which it can be transferred to China, Texas officials said.

 

Under the settlement, Temu has agreed to conduct annual independent product safety testing to identify goods containing dangerous chemicals or materials. The company must remove any products found to contain hazardous substances, terminate the relevant seller and its affiliated stores, notify affected Texas consumers and issue full refunds.

 

Texas Attorney General Ken Paxton said the settlement also requires Temu “to implement rigorous new product audits and safety standards to protect consumers from dangerous materials in products, including clothing and children’s items”. He added that the agreement would prevent Temu from collecting and using Americans’ data.

 

Temu had more than 82.4 million active users in the United States as of September 2023, according to Paxton’s office.

 

As part of the settlement, Temu will pay $3 million to the state. Texas said violations of certain data security provisions could result in a penalty of up to $8 million for each year in which a violation occurs.

 

Several US states have sued Temu following reports alleging that the retailer and its parent company, PDD Holdings, used intrusive mechanisms in their applications.

 

Temu, which did not admit wrongdoing, said in a statement that it had “come to an agreement to resolve this matter as we continue to focus on serving consumers and supporting businesses across Texas”.

 

The settlement requires Temu to restrict the transfer to China of US data needed to fulfil transactions, including customers’ shipping addresses.

 

Texas had alleged that Temu used code that gave it an inappropriate level of access to users’ devices. The company has denied the allegations.