Shopping app Temu will pay Texas $3 million, store Texans’ personal data on U.S. servers, and submit to independent compliance audits under a new settlement Attorney General Ken Paxton announced Friday.
The settlement comes after Paxton sued PDD Holdings, Inc. and WhaleCo Inc., which conducts business as Temu, earlier this year for harvesting the personal information of customers and exposing it to the Chinese Communist Party.
In the lawsuit, Paxton alleged that the company violated Texas law “by engaging in false pricing schemes, misrepresenting the quality of its goods, and covertly mining the data of Texans.”
Paxton also called the shopping app “a Trojan horse” that has the ability to bypass security protocols and allow “backdoor access” to a user’s private data, all under the guise of an avenue to buy “affordable great products.”
Although Temu’s principal offices currently are located in Ireland, Paxton says that the company has maintained significant operational ties to China, which is where it was originally founded.
Temu has also been accused of selling products that contain harmful chemicals, such as PFAS, posing health risks to consumers.
Paxton’s Friday announcement called the settlement “a historic victory for data privacy, consumer protection, and Texans.”
“Through this victory, we can now ensure that Temu cannot harvest Americans’ sensitive data and expose it to the Chinese Communist Party,” said Paxton. “Texans can now rest assured that Temu cannot sell products containing toxic and dangerous chemicals that threaten the health of the American people. We went after them and won more for Texans than anyone thought possible. Because that is what we do. We have never backed down in the fight to protect Texans.”
As part of the settlement, Temu will not only pay $3 million to the State of Texas, but also will be required to store the personal data of Texans only on American servers and maintain a “qualified independent firm” that will conduct annual audits to assess compliance.
It is also required to restrict access of personal data from both individuals and entities that are based in China.
If the company is ever found noncompliant after an audit, it is then required to pay an $8 million penalty and must fix the issue within 60 days.
Temu will also be required to annually test “a cross section of products commonly purchased by Texas Consumers” for harmful materials, including lead, formaldehyde, and heavy metals.
If a product tests positive for any harmful materials above the amount exceeding federal safety standards, Temu will be required to take steps for the product’s removal. These steps include removing the product within two business days, directly notifying all Texas consumers who purchased the product, and providing a full refund for the item.
A company spokesperson told Texas Scorecard that “Temu has come to an agreement to resolve this matter as we continue to focus on serving consumers and supporting businesses across Texas.”
“We believe that this agreement, which involves no admission of wrongdoing, is in the best interests of all involved,” added the spokesperson.
