Shein agrees to $100m settlement over US customer complaints
Chinese fast-fashion retailer Shein has agreed to pay $100 million to settle a US Federal Trade Commission (FTC) investigation into delayed deliveries and other customer complaints, a source familiar with the matter told Reuters on Friday.
The settlement, which represents 44% of the company’s second-quarter profit, comes as the online fashion giant faces increasing regulatory scrutiny and tax measures in Europe and the United States that have slowed its growth.
Shein, which was founded in China but is now headquartered in Singapore, told Reuters that it had reached a “constructive outcome” with the FTC and would provide further details soon. An FTC spokesperson declined to comment.
In documents filed for its Hong Kong initial public offering in July, Shein warned that the US investigation could result in substantial financial penalties.
Records from the FTC reviewed by Reuters show that consumers lodged more than 12,000 complaints concerning purchases worth over $11 million between January 2020 and June 2026.
Some of the complaints involved delivery problems, with customers reporting to the FTC and the Better Business Bureau that packages marked as delivered by Shein never arrived. Others alleged that the company’s customer service failed to resolve their concerns.
Reuters said it could not independently verify the allegations or establish whether the complaints had eventually been resolved.
In addition to selling its own clothing, Shein operates an online marketplace where third-party vendors offer a wide range of products, including toys, household appliances and home decorations.
Rising European fees add to Shein’s challenges
Shein’s difficulties have extended to Europe, where its shares have fallen 22% from their September 1 listing price as investors assess the impact of the European Union’s €3 fee on low-value e-commerce packages.
The company is also preparing for an additional €2 handling charge, scheduled to take effect on November 1, which will bring the total fees to €5 for each separate customs code.
Mike Ryan, head of e-commerce insights at Smarter Ecommerce, said the way the tariffs were being applied placed Shein at a particular disadvantage. He has also tracked the company’s reduced spending on Google advertising visibility in Europe.
Shein, which built its popularity by selling low-cost items such as $5 dresses and $10 jeans, has been forced to increase prices following the closure of customs duty loopholes in the United States and Europe.
Chief Executive Officer Sky Xu said last month that the company planned to expand its range of higher-priced brands to improve profitability.
The retailer is also facing an ongoing investigation by the European Commission over allegedly illegal products sold through its online marketplace.
Last year, France’s data protection authority fined Shein €150 million, equivalent to $168 million, over the improper use of cookies.
The latest settlement is not the first time the FTC has taken action against online retailers over delivery-related complaints.
US fashion retailer Fashion Nova was fined $9.3 million in 2020 for failing to fulfil shipping promises and offering customers gift cards instead of refunds.
Similarly, Hey Dude, owned by Crocs Inc., was fined $1.95 million in 2023 for failing to inform customers about shipping delays and suppressing negative reviews.
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