Temu to Pay $2 Million in First-Ever INFORM Act Enforcement Brought by DOJ & FTC

Key Takeaways

• Joint Action: The DOJ and FTC jointly announced the first-ever enforcement of the INFORM Consumers Act.
• $2 Million Penalty: Temu’s parent company, Whaleco Inc., must pay $2 million and comply with a court-approved injunction.
• Alleged Failures: Regulators said Temu withheld seller addresses, failed to provide reliable reporting tools, and omitted disclosures in gamified shopping features.
• Court-Ordered Compliance: The stipulated order requires Temu to implement accessible electronic and telephonic reporting mechanisms and to make seller disclosures clear and conspicuous across all platforms.
• Signal to Marketplaces: Both DOJ and FTC warned that online marketplaces face “serious consequences” if they do not comply with the INFORM Act.

Deep Dive

Temu’s parent company, Whaleco, has agreed to pay a $2 million civil penalty to resolve allegations that it violated the INFORM Consumers Act, the first enforcement action brought under the law. The case was jointly announced by the Department of Justice (DOJ) and the Federal Trade Commission (FTC).

The INFORM Consumers Act, which took effect in 2023, requires online marketplaces to disclose key details about high-volume third-party sellers, such as their names, addresses, and contact information, and to provide both electronic and telephonic mechanisms for consumers to report suspicious marketplace activity.

In a complaint filed in the U.S. District Court for the District of Massachusetts, the government alleged that Temu failed to meet these requirements. According to the filings, the platform did not consistently provide required reporting tools, withheld seller addresses and other identifying information, and failed to include reporting mechanisms in its gamified shopping features until late 2024. Even when disclosures were present, regulators said, they were not “clear and conspicuous” as the law demands.

“The Justice Department is committed to ensuring American consumers have information about third-party sellers online and mechanisms to report suspicious marketplace behavior,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “The Department will continue to ensure that online marketplaces follow the INFORM Consumers Act.”

FTC officials echoed the message, emphasizing that marketplaces face steep consequences if they cut corners on compliance.

“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 FTC’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.”

The stipulated order, already approved by the court, requires Temu not only to pay the $2 million penalty but also to implement new compliance measures. These include ensuring reporting mechanisms are accessible and functional, and that seller information is disclosed clearly and conspicuously across all versions of its platform, from mobile apps to desktop sites and gamified listings.

The enforcement action signals that both the FTC and DOJ are prepared to police compliance with the INFORM Act aggressively. For online marketplaces, the case serves as a warning that inadequate disclosures and weak reporting systems could bring swift regulatory and legal consequences.

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