June 25, 2024 – Arkansas Attorney General Tim Griffin on Tuesday filed a lawsuit against e-commerce giant Temu, accusing the online marketplace of being a “data-theft business” that has violated state consumer protection and privacy laws.
Temu is an online retailer known for selling a wide array of products to consumers in the United States. It is owned by the Chinese company PDD Holdings Inc. The lawsuit is filed against PDD Holdings Inc. and WhaleCO Inc., a Boston-based company that operates Temu’s online platform.
Announcing the lawsuit during a news conference in Little Rock, Griffin accused Temu of spying on users through its app, and collecting users’ location, fingerprints and other personal information.
“So Temu is interesting because they’re not just getting consumer data, they are able to take whatever they want using spyware and malware on your app,” Griffin said. “So the average American thinks that they’re looking at a shopping app like any other shopping app, but Temu is actually not only taking your data that relates to the sales, they’re taking all sorts of data.”
The lawsuit, filed in Cleburne County, states Temu violated the Arkansas Deceptive Trade Practices Act, a consumer protection law, and the Arkansas Personal Information Protection Act, which is meant to protect privacy. The state seeks damages and injunctive relief.
A representative for Temu did not respond to a request for comment on the lawsuit.
Griffin said the allegations are particularly serious given the company’s ties to China, saying there is little gap between private Chinese corporations and the Chinese government.
Temu is the sister app of Pinduoduo, a large Chinese e-commerce store that competes with other Chinese marketplaces such as Alibaba and JD.com, according to the New York Times. Temu is the non-Chinese version of Pinduoduo, specializing in discount shopping particularly for clothes, beauty and tech products, according to the New York Times.
The shopping app has come to prominence recently, running an ad during the Super Bowl in February. According to Apple, Temu is the top free app for iPhone users, ahead of Threads, TikTok, Google, WhatsApp and ChatGPT. PDD Holdings, which owns Temu and Pinduoduo, is a publicly traded company on the Nasdaq and is headquartered in Dublin, Ireland. WhaleCO, Inc. which operates Temu and is owned by PDD Holdings, is located in Boston, Mass., according to the lawsuit.
Griffin said issues around Temu’s security concerns are widely known, noting that Apple temporarily suspended the e-commerce platform from its app store for misrepresenting what type of data it was collecting from users. In 2023, Google also suspended Pinduoduo after discovering malware on the app.
The attorney general said Temu violated the Arkansas Deceptive Trade Practices Act as it has misled consumers, as the app is designed to evade scrutiny by Apple and Google’s app store and the company markets itself as an e-commerce store but really is in the business of selling private information.
The lawsuit claims Temu violated the Arkansas Personal Information Protection Act because its app allowed unauthorized access to Arkansans’ private information and because of the company’s ties to China.
“Defendants are beholden under controlling Chinese law to make any and all personal information –- including personal information of Arkansans — available to the Chinese government immediately and without qualification upon request,” according to the lawsuit.
“We’re talking about malware, we’re talking about spyware, we’re talking about code that’s written to evade detection,” Griffin said. “It is wholly separate and distinct from the pedestrian, ordinary data collection.”
No other states have signed on to Arkansas’ lawsuit against the e-commerce company, although Griffin said it’s possible other attorneys general could join. Last year, Montana banned Temu, along with other apps, from government devices because of security concerns.
Griffin declined to answer when asked by the Democrat-Gazette why he filed the lawsuit in Cleburne County, saying “We always think about where is best to file suits to best serve the people of Arkansas.”
By Neal Earley, Arkansas Democrat-Gazette
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