Fast-fashion retailer Temu is suing rival Shein for allegedly using “mafia-style intimidation” tactics to keep its competitive edge in the market.
Temu claims Shein leveraged its “dominance in ultra-fast fashion … to foreclose Temu from access to suppliers,” according to the lawsuit filed in Washington, D.C., Wednesday.
Shein, which reportedly filed to go public in the U.S. about two weeks ago, does so through “exclusive dealing agreements, mafia-style intimidation of suppliers, and anticompetitive pricing floor requirements,” the suit added. Both companies have ties to China.
A spokesperson for Shein told FOX Business the company believes the “lawsuit is without merit” and plans to “vigorously” defend itself against the accusations.
CHINA’S SHEIN FILES FOR US IPO IN MAJOR TEST FOR INVESTOR APPETITE – SOURCES
Temu told FOX Business in a statement, “Their actions were too exaggerated. We had no choice but to sue them.”
Temu alleged Shein uses “detention scare tactics against suppliers who dare to sell to Temu, including false imprisonment and seizure of cell phones during meetings Shein calls on false pretenses.”
HOUSE COMMITTEE RELEASES ‘SHOCKING’ FINDINGS IN REPORT ON CHINESE BUSINESSES OPERATING IN US
Temu also claimed in the suit that Shein sends DMCA takedown notices to suppliers who list their products on Temu. A DMCA takedown is when content is removed from a platform at the request of the owner of the content.
According to the lawsuit, Temu claimed Shein resorted to some of these “coercive measures” in the months leading up to its advertising campaign for the Super Bowl in February 2024.
Aside from the latest lawsuit, both companies have been under scrutiny from U.S. lawmakers after the House Select Committee on the Chinese Communist Party released a report indicating that Chinese e-commerce suppliers are likely shipping products to the U.S. in violation of Uyghur forced labor laws.
The report noted that both companies “rely heavily on the de minimis exception to ship packages directly to U.S. consumers,” allowing them to avoid being screened for Uyghur Forced Labor Prevention Act (UFLPA) violations.
The report shocked lawmakers, with Chairman Rep. Mike Gallagher, R-Wis., telling Fox News Digital, “Temu is doing next to nothing to keep its supply chains free from slave labor.”
The committee’s investigation is ongoing.
The Better Business Bureau has received hundreds of complaints about both companies, many regarding the quality of products.
FOX News’ Haley Chi-Sing contributed to this report.