On September 5, 2025, the Federal Trade Commission (“FTC”) announced its first enforcement action under the INFORM Consumers Act, ordering Whaleco, Inc., the operator of online marketplace Temu, to pay a $2 million civil penalty. The case centers on allegations that Temu failed to provide consumers with mechanisms to report suspicious marketplace activity, and even when provided, these mechanisms were difficult for consumers to access.

The INFORM Act requires online marketplaces to include a reporting mechanism on 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, including the name of the seller, its physical address, and contact information.

The Complaint against Temu alleges that it did not maintain a telephonic reporting mechanism for suspicious listings, and that when a phone option was finally introduced in early 2024, it was difficult to locate and use. The FTC also pointed to deficiencies in Temu’s “gamified” shopping experiences, such as spin wheels and coupon games, where seller disclosures and reporting options were missing until late 2024 and not displayed in a clear or prominent way.

Under the proposed Settlement, which is pending court approval, Temu must pay the penalty within seven days and implement significant compliance changes. These include a user-friendly telephonic reporting system and clear, accessible disclosures of reporting options and seller details across all versions of its marketplace. The compliance obligations will be continuing, with Temu being required to submit a compliance report one year after the order is entered, and within 14 days of any material change for 10 years thereafter, as well as create and maintain relevant record for 10 years.

This is not the first time that Temu’s website and marketing practices have come under scrutiny. In 2024, Temu lost a motion to compel arbitration in one of the first ever cases under the dangerous Oklahoma Telephone Solicitation Act (“OTSA”), and a court refused to stay a TCPA class action pending the outcome of appeal on the enforceability of the arbitration clause.