Iowa says Temu and its Chinese-owned parent company open consumers up to spying by the Chinese government.
DES MOINES, Iowa (CN) – Iowa sued Temu and its Chinese parent company Wednesday, alleging the online retailer violates Iowans’ privacy rights and exposes them to spying by the Chinese government.
“Temu advertises itself as an e-commerce platform that offers low-cost goods to consumers, even telling Iowans they can ‘shop like billionaires,'” Iowa Attorney General Brenna Bird said in a statement released Wednesday. “But the promise of savings lures Iowans to the platform where Temu fraudulently collects Iowans’ data that could be accessed by the Chinese Communist Party.”
In the 86-page complaint, Iowa accuses PDD Holdings, Inc. and Whaleco Inc. – which does business as Temu – for trespassing Iowa Consumer Fraud Law. The state also alleges that Temu makes false representations about the quality and price of goods it sells to consumers.
PDD Holdings was formerly known as Pinduoduo, headquartered in Shanghai, China. In February 2023, PDD Holdings moved its main executive offices from Shanghai, China to Dublin, Ireland. The state says PDD Holdings continues to have significant operations in China, with multiple subsidiaries located within the country.
In the complaint filed in Polk County Circuit Court, the state says that Temu, through its online shopping app, “collects data from Iowans and provides a route for the collected data to flow to China. It does so by committing numerous consumer frauds, such as false representations of product quality, registration fraud, price misrepresentations and more.”
The state says Temu collects users’ sensitive, personally identifiable information without their knowledge or consent. Temu’s app is deliberately designed to avoid detection, the state alleges, “even going so far as to be able to reconfigure itself and its properties on an individual’s phone without the knowledge of anyone” except the defendants.
The Pinduoduo app has been called malware by security experts, Iowa claims, and Google suspended the Pinduoduo app from the Google Play Store after discovering malware issues in the app. Although the defendants made changes to the Pinduoduo app in response to the suspension, “they continued to violate users’ privacy rights,” Iowa says.
Temu makes “false representations” about its privacy-invasive behavior, the state says, adding that Temu “misleads Iowans about the quality of the products offered on its platform by flooding the United States and Iowa markets with substandard products,” which violates the Iowa Consumer Fraud Act.
“Temu’s Iowa customers have filed dozens of complaints with the (Iowa Better Business Bureau) and the Iowa Attorney General about Temu over the past three years,” the state says in its complaint. “Many Iowa consumers complained to the Better Business Bureau that even after returning merchandise to Temu, they never received a refund. And many others complained of receiving merchandise they never ordered, some of which were charged and they could not receive refunds.”
PDD Holdings did not immediately respond to a request for comment on Wednesday.
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