Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Online marketer Temu settles FTC’s INFORM Act charges, (Sep 8, 2025)

By Peter Reap, J.D., LL.M.

It is the first case brought under the Act which aims to help consumers avoid counterfeit, unsafe, or stolen products.

Whaleco, Inc., which operates the online marketplace Temu, will pay $2 million to resolve allegations that it violated the INFORM Consumers Act of 2023, by failing to provide consumers with required information and tools to help them avoid and report stolen, counterfeit, or unsafe goods while shopping online, the FTC announced (U.S. v. Whaleco, Inc., No. 1:25-cv-12466 (D. Mass. Sept. 5, 2025)).

The complaint. The FTC’s complaint against the online retail giant, filed in the federal district court in Boston, is the first action to enforce the INFORM Act, which requires online marketplaces to disclose a reporting mechanism on the product listings of all high-volume third party sellers that consumers can use to report suspicious activity to the online marketplace either electronically or by telephonic means. The Act also requires online marketplaces to disclose identifying information for many high-volume third party sellers—the name of the seller, its physical address, and contact information to allow consumers to reach the seller directly.

According to the complaint, Temu’s reporting mechanism disclosures for suspicious marketplace activity have fallen short of the company’s obligations under the INFORM Consumers Act. Temu failed to provide any telephonic mechanism that allows consumers to report suspicious marketplace activity until January 2024. Temu also failed to provide any reporting mechanism (electronic or telephonic) in gamified shopping experiences on the Temu online marketplace until November 2024, a year and nearly five months after the effective date of the INFORM Act.

Further, when Temu did disclose a reporting mechanism, it failed to make that disclosure in a clear and conspicuous manner. In numerous instances, consumers have been required to locate and recognize the hyperlinked word “Report” (without further clarification) to lead to a reporting menu, and click the hyperlinked word to access Temu’s reporting menu. In addition, to reach Temu’s prompt that, since January 2024, has enabled consumers to request a telephone callback and leave a report via voice message, Temu has required consumers to locate and access the reporting menu, make one or more selections within the reporting menu, click an additional link, and enter their phone number for a callback.

In addition, Temu’s seller identity disclosures have fallen short of the company’s obligations under the INFORM Act, the agency charges. Until at least a year after the Act’s effective date, consumers were often required to click numerous links to access the means of direct messaging that Temu provides to consumers that enables them to send messages to sellers. Several of the links that Temu required consumers to click to reach seller identity information did not obviously lead to seller identity information. And, in numerous instances, Temu required customers to click vague links that read “See all” or icons in order to access Temu’s seller identity disclosures.

The proposed settlement. The proposed court order, if approved by the district court, will require Temu to:

• Provide a telephonic reporting mechanism that allows consumers to listen back to, re-record, and accept any report before submitting it, and provide instructions in a way that consumers can easily hear and understand; and

• Disclose certain information as required under the Act—including electronic and telephonic reporting mechanisms and high-volume third party sellers’ names, addresses, and a means of contacting them—in a way that is easy for consumers to notice and understand. This includes making required disclosures for gamified product listings and for all versions of the Temu online marketplace including its smartphone app and desktop and mobile websites.

The proposed order also includes a $2 million civil penalty against Temu, which must be paid within seven days of the district court’s entry of the stipulated order.

Mufarrige comments. “The INFORM Act is designed to ensure consumers have the information and tools they need to not only report suspicious activity to online marketplaces, but to directly identify and contact high-volume, third party sellers in many cases,” said Christopher Mufarrige, Director of the Federal Trade Commission’s Bureau of Consumer Protection. “Temu, one of the most recognizable online marketplaces, is responsible for complying with the Act. Today’s action serves as a reminder to online marketplaces that violating the INFORM Act can result in serious consequences, including civil penalties.”

Attorneys: Sarah B. Williams, U.S. Department of Justice, for the U.S.

Companies: Whaleco, Inc.

News: ConsumerProtection FederalTradeCommissionNews