Temu Agrees to $2M Penalty for Alleged INFORM Act Violations

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Posted: 9th September 2025

Natalie Sherman

Temu Agrees to $2M Penalty for Alleged INFORM Act Violations

Whaleco Inc., doing business as Temu, has been ordered to pay a $2 million penalty after federal regulators accused the company of violating the INFORM Consumers Act, a law designed to strengthen transparency in online marketplaces.

The case, filed in federal court in Boston, represents one of the first major enforcement actions under the Act, which requires online platforms to disclose more information about high-volume third-party sellers.

According to the Justice Department and the Federal Trade Commission, Temu failed to post clear identifying details for some of its high-volume sellers. In many cases, addresses were missing or incomplete, making it difficult for customers to know who was really behind the products they were buying.

Investigators also found that Temu’s reporting tools weren’t always working as required. Under the law, shoppers must be able to file complaints both online and by phone if they suspect fraud. Regulators said Temu didn’t consistently offer those options.

“The Justice Department is committed to ensuring American consumers have information about third-party sellers online and mechanisms to report suspicious marketplace behavior.” Assistant Attorney General Brett A. Shumate said in a statement.

The officials characterized the penalty as a clear warning to other fast-growing platforms: compliance is mandatory. In addition to the $2 million fine, Temu must revamp its compliance program by improving seller disclosures, repairing its reporting mechanisms, and submitting to federal oversight.

For consumers, these measures are intended to enhance transparency and provide more reliable tools for reporting potential fraud.

Temu’s rapid growth in the U.S. market, driven by low-cost goods shipped from overseas, has brought heightened regulatory scrutiny. Authorities emphasize that beyond price, compliance, transparency, and accountability are essential.

Whaleco Inc. is the U.S.-based operating company behind the fast-growing shopping app Temu, owned by Chinese e-commerce giant PDD Holdings. Headquartered in Boston, Whaleco manages Temu’s U.S. platform, which connects American consumers with low-cost goods sourced primarily from overseas sellers. The company has faced increased regulatory scrutiny as federal agencies enforce transparency, compliance, and consumer protection standards in the online marketplace sector.