Fast fashion: Shein fined a record €40 million for "deceptive commercial practices"

The government is cracking down once again on Shein. The fast-fashion company was fined €40 million for " deceptive commercial practices " following an investigation by the French Directorate General for Competition, Consumer Affairs and Fraud Control (DGCCRF), the branch of the Ministry of the Economy announced on Thursday, July 3.

The investigation by the fraud squad reveals in particular " the implementation " by the company Infinite Style E-commerce LTD (ISEL), responsible for sales of Shein products , of " deceptive commercial practices towards consumers regarding the reality of the price reductions granted ", the management wrote in a press release.

The fine was imposed with " the agreement of the Paris public prosecutor " and " following a settlement procedure ," the DGCCRF noted, adding that the fast-fashion company did not object to the penalty. This is a record fine for this type of offense.

What is Shein accused of? Primarily, it charges that it "increased certain prices before applying a discount ," or that it failed to take into account " previous promotions " when indicating a reference price.

The DGCCRF investigation found that in 57% of cases, the verified advertisements actually offered " no price reduction." In 19% of cases, they presented " a smaller reduction than announced, " and in 11%, the promotions were actually " price increases." " These practices of a profusion of crossed-out prices and permanent promotions thus give consumers the impression of getting a very good deal," the DGCCRF states.

During its investigation, the fraud squad explained that it had noted on Shein's website " the prices of several thousand products (sale prices, crossed-out prices and percentage reduction )" between October 2022 and August 2023. In addition to misleading promotions, the organization also focused on deceptive commercial practices concerning " the scope of the commitments" of the Chinese company " on its environmental claims."

In a statement to Agence France Presse, the latter claims to have " immediately implemented the necessary corrective actions, completed within two months " after being notified by the DGCCRF " in March 2024. " " All the points raised " by the DGCCRF investigation " have therefore been addressed for more than a year ," the company notes, specifying that " these adjustments have had no impact on the final prices offered to consumers ."

Shein also assures that ISEL, its parent company, takes "its legal and regulatory obligations in France very seriously " and remains " fully committed to transparency and compliance with French regulations ." Given its recent convictions and investigations for environmental pollution, deceptive business practices, unfair competition, and undignified labor, doubts remain.

For its part, the DGCCRF indicates that it " maintains its vigilance on the evolution of practices observed following these investigations ."

Minister of Commerce and SMEs Véronique Louwagie responded to the announcement of the fine on Thursday, stating that she was " writing to the European Commission to implement tools to delist platforms " in order to remove sites from search engine results, " even if they cooperate with the State ," like Shein.

The fast-fashion giant has already distinguished itself in the past by its commercial and environmental abuses and its lobbying activities. Last May, Shein and representatives of the company in France, including former Interior Minister Christophe Castaner, were the target of a report sent to the High Authority for Transparency in Public Life (HATVP) . The alert was issued by Friends of the Earth France and the Observatory of Multinationals, which pointed out "potential irregularities" in the declarations of lobbying actions carried out by the company and its employees.