CPSC Calls for an Investigation into Shein and Temu

In an open letter published on September 3, 2024, Consumer Product Safety Commission (CPSC) Commissioners Peter Feldman and Douglas Dziak called for an investigation into foreign-owned e-commerce platforms Shein and Temu to determine how these companies meet applicable obligations imposed by the Consumer Product Safety Act. Commissioners Feldman and Dziak asserted that Shein, Temu, and similarly situated e-commerce companies, “raise specific concerns,” including reports that “deadly baby and toddler products are easy to find on these platforms.”

Shein and Temu are foreign e-commerce websites, based in Singapore and China, respectively, that have grown in popularity in the United States, in part due to their low price points and wide range of product offerings. But they have also faced questions and scrutiny over how they are able to sell their goods at such low prices.

In the letter, Commissioners Feldman and Dziak assert that CPSC needs to investigate Shein and Temu “to determine how these foreign-owned firms that rely on overseas suppliers meet their obligations under the Consumer Product Safety Act. Manufacturers, retailers, importers, and distributors of consumer products all fall within the jurisdiction of CPSC.”

The Commissioners do not call out specific products, but cite to an August 2024 report published by The Information, a business technology publication, that highlights several products sold on Shein and Temu that Congress has banned. For example, the these platforms sell padded crib bumpers, which were banned by Congress in 2022.

Commissioners Feldman and Dziak hope the forthcoming investigation “will inform the Commission on the legal status of these platforms. To the extent a platform falls outside the Commission’s reach, policymakers must understand where gaps exist and how best to address them. Likewise, the Commission must better understand what enforcement challenges exist with respect to foreign third-party sellers. Where agency compliance staff discover safety violations, we expect CPSC to initiate enforcement actions.”

One of the main enforcement challenges that concerns the Commissioners comes from “de minimis” shipments—a rule that allows shipments valued at less than $800 to enter the U.S. with relatively little scrutiny. Many products sold on websites like Shein and Temu are inexpensive, bringing shipments under the $800 limit. The de minimis loophole presents enforcement challenges for CPSC, making it harder to target and block shipments with illegal or unsafe consumer products when suppliers with little or no U.S. presence distribute consumer products through these e-commerce platforms.  

Shein and Temu both already face strict regulations in the European Union. The European Commission deemed Shein and Temu to be Very Large Online Platforms (VLOPs) under the Digital Services Act, which requires the companies to comply with stringent rules surrounding risk assessments. Under these rules, the companies must increase surveillance for illegal products, comply with independent annual audits, and publish repositories of all the ads served on their interfaces.

Feldman and Dziak conclude their open letter with a warning: “Third-party sellers, domestic and foreign, are proliferating on online platforms. This form of commerce can benefit consumers and sellers in many ways, but CPSC must make clear its expectations regarding these platforms’ responsibilities to ensure safety.” Although CPSC’s attention currently appears focused on Shein and Temu, other e-commerce platforms should consider possible implications for their businesses. CPSC appears to be gearing up to take a more aggressive stance on safety requirements for products sold on domestic and foreign e-commerce platforms.