Brussels gives Shein an ultimatum: the 6 charges for which Shein is under investigation

The European Commission is significantly tightening its oversight of Shein, the emerging star in ultra-fast fashion eCommerce. The Brussels-based body has notified the Chinese platform of a series of practices that infringe upon EU consumer protection legislation.

This warning comes after an investigation led by the authorities of Belgium, France, Ireland, and the Netherlands, and conducted in conjunction with the Consumer Protection Cooperation Network (CPC). It highlights a range of tactics that, according to Brussels, distort users’ purchasing decisions and violate key directives such as the Unfair Commercial Practices Directive and the Consumer Rights Directive.

Questioned practices: from unreal offers to questionable sustainability

The case file outlines six major areas where Shein would be violating the European regulatory framework:

• Fake discounts: promotions not based on actual previous prices, giving the appearance of a discount that is not real, thus violating the pricing directive.
• Commercial pressure tactics: use of countdown clocks or urgency messages to force rushed purchasing decisions.
• Misleading information: lack of transparency in return and refund policies, as well as failures in their processing.
• Confusing labeling: use of labels that suggest “extra” benefits of products when they are actually just minimum legal requirements.
• Greenwashing: environmental claims not supported by data or verifiable certifications.
• Opaque contact: absence of clear ways for consumers to file complaints or seek inquiries.

Additionally, the CPC network is assessing whether Shein manipulates or partially presents product ratings and whether it adequately informs about its role as an intermediary in operations with third-party sellers on its marketplace.

In the words of Michael McGrath, Commissioner for Consumer Protection, “today’s action sends a clear message: We will not prevent eCommerce platforms from being held accountable, regardless of where they are located. EU consumer protection legislation is not optional and must be applied in all cases.”

Indeed, Shein now faces a countdown: the company has one month to present its arguments and correction commitments. If the Commission finds the responses unsatisfactory, national authorities could initiate enforcement actions that include fines proportional to the company’s business volume in each affected country.

A new controversy for Shein

In addition, Shein is also being investigated by the Commission under the framework of the Digital Services Act (DSA), having been designated in April 2024 as a Very Large Online Platform (VLOP). This investigation deals with, among other things, the presence of illegal content and goods in Shein, the transparency of its recommendation systems, and the measures to mitigate risks related to consumer protection, public health, and user welfare.

Let’s remember that just a few days ago, the European Commission introduced a proposal to establish a fee of two dollars for every package shipped from non-European Union countries and valued under 150 euros, a measure that would directly impact Shein’s business model. This initiative stems from the need to adapt customs regulations to the reality of modern eCommerce. As we reported in February, the European Union faces an avalanche of millions of packages daily, complicating the effective supervision of product safety, quality, and compliance. The two-dollar fee aims to be a mechanism to compensate for costs associated with this logistical and regulatory challenge, while also mitigating the advantage currently enjoyed by Asian platforms.

Since its founding in 2008, the history of Shein has been one of rapid growth, becoming one of the global giants in online fast fashion, especially among young audiences and on social networks.

For example, Shein has been questioned for lacking transparency in working conditions at its factories, with reports of long hours and lack of safety for workers. In fact, the Swiss watchdog Public Eye published a report at the end of 2021 denouncing the existence of unsafe workshops without windows and emergency exits, as well as safety protocols. They also reported the presence of workers without contracts and abusive workdays, reaching 17 hours. A later BBC documentary also questioned the company’s labor practices.

Image: Shein