Temu pays $2 million in first INFORM Act enforcement case

The Federal Trade Commission announced September 5, 2025, the first enforcement action under the INFORM Consumers Act, securing a $2 million settlement with Whaleco, Inc., operator of the Temu online marketplace. According to the stipulated order filed in the U.S. District Court for the District of Massachusetts, Temu violated federal requirements designed to help consumers report suspicious marketplace activity and identify high-volume third-party sellers.

The enforcement action represents a significant milestone for online marketplace regulation. The INFORM Consumers Act, which took effect June 27, 2023, establishes specific disclosure requirements for platforms connecting consumers with third-party sellers. According to the court documents, Temu failed to provide mandatory telephonic reporting mechanisms and clear seller identification disclosures across its platform interfaces.

Technical implementation failures detailed

According to the complaint, Temu's violations centered on two primary compliance areas. The company failed to provide telephonic reporting mechanisms until January 15, 2024, nearly seven months after the Act's effective date. When Temu eventually implemented phone reporting, the process required consumers to navigate through multiple menu selections and enter phone numbers for automated callbacks.

The filing details specific technical deficiencies in Temu's implementation. Consumers seeking to report suspicious activity through standard product listings had to scroll past product information, reviews, and additional content modules to reach a "Product details" section containing reporting links. On the Temu smartphone application, this navigation typically required scrolling through two full screens. According to the documents, the reporting link often appeared as merely "Report" without additional context indicating its function.

For telephonic reporting access, which Temu added in January 2024, users faced additional navigation hurdles. The "Request a phone call to report" link appeared only after selecting specific report categories and remained hidden for certain violation types. According to the complaint, this link displayed in gray text against white backgrounds, making detection difficult for consumers.

Gamified shopping experiences compliance gaps

The court filing reveals that Temu operated gamified shopping experiences without any reporting mechanisms until November 24, 2024. These experiences, which allowed consumers to "play games, spin wheels, earn coupons, and undertake other activities while browsing and purchasing products," presented abbreviated product listings but lacked required consumer protection tools.

According to the documents, gamified experiences presented consumers with product series for purchase through simplified interfaces. However, these abbreviated listings contained no mechanisms for reporting suspicious marketplace activity, creating compliance gaps that persisted for 17 months after the Act's implementation.

Seller identification disclosure violations

The enforcement action also addresses Temu's failure to properly disclose seller identity information. According to the complaint, Temu must provide full names, physical addresses, and contact information for high-volume third-party sellers generating $20,000 or more in annual gross revenue. The company's initial disclosures required consumers to navigate multiple interface layers to access this information.

Until June 28, 2024, gamified shopping experiences contained no seller identity information. Standard product listings required consumers to access "Product details" sections, expand gray "See all" links, and click additional "Store information" links to view seller details. According to the filing, several navigation links provided no clear indication they would lead to seller identity information.

The documents specify that Temu's mobile website lacked store information links for required disclosures until at least September 19, 2023. The company's seller messaging function, launched June 27, 2023, remained inaccessible through abbreviated product listings in gamified experiences until November 24, 2024.

Regulatory context and industry implications

The INFORM Consumers Act emerged from congressional concerns about counterfeit and unsafe products sold through online marketplaces. According to the legislation, platforms must collect and verify bank account information, contact details, and tax identification from high-volume sellers. The Act also mandates consumer reporting mechanisms and seller identification disclosures to enable direct communication between buyers and sellers.

Christopher Mufarrige, Director of the Federal Trade Commission's Bureau of Consumer Protection, emphasized the action's significance for marketplace accountability. "Temu, one of the most recognizable online marketplaces, is responsible for complying with the Act," Mufarrige stated. "Today's action serves as a reminder to online marketplaces that violating the INFORM Act can result in serious consequences, including civil penalties."

The settlement establishes compliance precedents for other marketplace operators. According to the stipulated order, Temu must provide telephonic reporting mechanisms with user-friendly features including listen-back capabilities and clear audio instructions. The company must also ensure reporting mechanism disclosures appear prominently on product listings across all platform interfaces.

Financial penalties and ongoing obligations

The $2 million civil penalty represents the maximum allowable under the INFORM Act's enforcement framework. According to the court filing, Temu must pay this amount within seven days of the stipulated order's entry. The settlement also imposes ongoing compliance monitoring requirements lasting ten years.

Under the agreement, Temu must submit annual compliance reports detailing its adherence to Act requirements. The company must also notify the Commission within 14 days of any structural changes affecting compliance obligations. According to the order, the Federal Trade Commission retains authority to interview Temu employees and conduct inspections to verify ongoing compliance.

The enforcement action includes specific technical requirements for future compliance. Temu must disclose reporting mechanisms at product listing tops or within product detail sections, ensure single-click access to reporting functions, and maintain consistent disclosures across desktop, mobile, and application interfaces. Seller identity information must remain easily accessible without requiring multiple navigation steps.

Platform modification timelines

According to the documents, Temu began implementing INFORM Act compliance measures following the Commission's June 15, 2023 notification letter. The company received this correspondence June 16, 2023, containing the Act's text and effective date information. Internal company documents from May and June 2023 demonstrate Temu's awareness of impending obligations.

The implementation timeline reveals gradual compliance improvements. Temu launched reporting links on standard product listings around June 27, 2023, coinciding with the Act's effective date. Telephonic reporting capabilities followed January 15, 2024. Store information disclosures for gamified experiences appeared June 28, 2024. Complete reporting mechanism availability across all platform experiences occurred November 24, 2024.

The extended implementation period raises questions about marketplace operators' compliance preparation. According to the complaint, Temu's violations continued after receiving formal Commission notification and occurred while the company maintained ongoing platform development capabilities.

Industry compliance implications

The Temu settlement provides clarity for marketing professionals working with online marketplace advertising. The enforcement establishes specific standards for compliance verification that affect campaign planning and platform selection decisions. Marketplaces must now demonstrate technical implementation of consumer protection mechanisms across all user interfaces.

For digital marketing professionals, the case highlights the importance of platform compliance verification before campaign deployment. The regulatory framework extends beyond traditional advertising standards to encompass consumer protection mechanisms that affect overall platform credibility and legal standing.

The settlement's technical requirements establish benchmarks for evaluating marketplace compliance. Platforms must provide single-click access to reporting mechanisms, maintain consistent disclosures across interfaces, and ensure telephonic reporting availability with user-friendly features. These requirements affect how marketing professionals assess platform reliability and consumer protection capabilities.

Broader regulatory landscape

The INFORM Act enforcement occurs within a broader regulatory environment affecting online marketplaces. Recent developments include enhanced intellectual property protection initiatives and international regulatory coordination. The European Union's Digital Services Act and similar frameworks worldwide create overlapping compliance obligations for global marketplace operators.

Consumer protection authorities continue identifying widespread marketplace violations, with survey data showing 72% of Australian consumers encountering potentially unfair practices within 12 months. These findings support regulatory arguments for enhanced marketplace oversight and consumer protection mechanisms.

The enforcement action demonstrates how trade policy and regulatory compliance intersect in digital marketing contexts. Platform advertising strategies face increasing scrutiny as regulatory frameworks evolve to address cross-border commerce and consumer protection concerns.

Timeline

• December 29, 2022: Congress enacts INFORM Consumers Act as part of Consolidated Appropriations Act of 2023
• June 15, 2023: FTC sends notification letter to Temu regarding INFORM Act requirements and June 27 effective date
• June 16, 2023: Temu receives FTC notification letter
• June 27, 2023: INFORM Consumers Act takes effect; Temu begins providing basic reporting links on standard product listings
• September 19, 2023: Temu adds store information links to mobile website interface
• January 15, 2024: Temu implements telephonic reporting mechanism through callback system
• June 28, 2024: Temu adds seller identity disclosures to gamified shopping experience listings
• July 17, 2025: Kentucky Attorney General files consumer protection lawsuit against Temu over data collection practices
• July 29, 2025: Temu joins International Trademark Association to strengthen intellectual property protection efforts
• September 5, 2025: FTC announces $2 million settlement for INFORM Act violations
• November 24, 2024: Temu provides complete reporting mechanism coverage across all platform interfaces

Summary

Who: Federal Trade Commission and Whaleco, Inc. (doing business as Temu), a Delaware corporation operating online marketplace platforms

What: First enforcement action under INFORM Consumers Act resulting in $2 million civil penalty for violations of consumer reporting and seller disclosure requirements

When: Settlement announced September 5, 2025, addressing violations occurring from June 27, 2023 through November 24, 2024

Where: U.S. District Court for the District of Massachusetts, affecting Temu's nationwide online marketplace operations serving United States consumers

Why: Temu failed to provide required telephonic reporting mechanisms for suspicious marketplace activity and failed to properly disclose high-volume third-party seller identity information in clear and conspicuous manner across all platform interfaces