China’s e-commerce platform, Temu, has reached a settlement with the state of Texas in the United States regarding user data privacy issues. They have agreed to store personal data of American users on servers located within the United States, restricting access to the data and cross-border transmissions, as well as enhancing product safety inspections. This marks the first settlement case among several states in the U.S. that have raised privacy concerns against Temu.
According to the terms of the settlement agreement, Temu is required to store personal data of American users on servers owned and controlled by entities within the United States, and limit the transmission of relevant information to China. For data necessary to complete transactions, such as shipping addresses, Temu must also restrict access by the Chinese side.
Back in February, Ken Paxton, the Attorney General of Texas, filed a lawsuit against Pinduoduo Holdings and WhaleCo, the U.S. operational company of Temu, alleging that the two companies misled consumers, illegally collected personal data of Texas residents, and put such information at risk of being accessed by Chinese authorities. Temu denied these allegations.
The settlement agreement also stipulates that Temu must undergo independent product safety inspections annually to identify items containing harmful chemicals or other hazardous materials. Upon discovering such products, Temu must remove them from sale, terminate cooperation with the implicated sellers and their associated stores, notify affected consumers in Texas, and issue full refunds.
Paxton stated that the agreement requires Temu to strengthen product reviews, implement stricter safety standards, with a focus on items like clothing, children’s products, to reduce consumers’ risk of exposure to dangerous substances.
Under the terms of the agreement, Temu is required to pay $3 million to Texas. In case of violations of data security provisions, each year of non-compliance may result in fines of up to $8 million.
Public data shows that so far, attorneys general from eight states in the U.S. have filed lawsuits against Temu and its parent company, including Arkansas, Nebraska, Kentucky, Arizona, Oklahoma, Texas, Iowa, and Missouri. The accusations mainly revolve around user data privacy, personal information collection, deceptive marketing, and consumer protection issues.
Moreover, this commercial dispute has escalated to national security and geopolitical levels. Several state governments openly expressed concerns in the complaints, questioning the lack of transparency in Temu’s data processing and strongly suspecting that Chinese authorities could exploit national security regulations in China to forcibly access or utilize the privacy data of American consumers.
The litigation also encompasses matters of business integrity and intellectual property rights. The plaintiffs accuse the platform of turning a blind eye to the proliferation of counterfeit goods infringing upon local brands, intellectual property of local colleges and sports teams, seriously harming local economic interests.
The Office of the Attorney General in Texas revealed that as of September 2023, Temu had over 82.4 million active users in the United States.
In a statement, Temu expressed that the company has reached an agreement on this matter and will continue to serve consumers, support Texas businesses.
(Reference: Reuters News)