Temu is suddenly all-over social media. Within just a year of its launch in 2022, the online marketplace amassed a whopping 100 million users looking for low-cost goods that are manufactured in China. On the Temu website and mobile app, users can buy just about anything: car accessories, clothing, kitchen appliances, electronics, outdoor furniture, power tools, and baby clothes.
Temu’s swift rise to becoming one of the most popular mobile apps in the United States has brought the company’s user privacy practices under intense scrutiny. Temu is now facing class action lawsuit in federal courts in New York and Illinois, with claims centered around data privacy issues.
The Class Action Suits
In both class action suits, plaintiffs allege that the Temu’s app is designed to embed a spyware and malware on user’s phones to collect sensitive personal information. Specifically, plaintiffs claim that Temu “secretly and invasively amassed massive amounts of extremely private information and data about its users by tracking their activity on third-party websites.”
In the Illinois lawsuit, plaintiffs allege that Temu’s user data collection practices go “beyond what is necessary for an online shopping app” and they cite experts who say the app gives Temu access to “literally everything on your phone.”
The lawsuits cite a warning by the Better Business Bureau that cautioned users about Temu’s broad collection of personal information, which include names, phone numbers, addresses, birthdates, social media photos, social security numbers, and biometric data. The lawsuit further alleges that Temu also failed to safeguard the massive data it collects, leaving users’ personal information vulnerable to theft by hackers. Plaintiffs describe the failure as part of Temu’s effort to save money resulted in cutting corners on security measures that could have prevented data breaches.
Temu’s conduct, plaintiffs assert, violated several laws, including the Computer Fraud and Abuse Act, and the Electronic Communications Privacy Act. They also claim that Temu violated several state businesses, privacy, and anti-wiretapping laws.
Temu’s Response
In Illinois, Temu has responded by asking the court to toss out the lawsuit and force plaintiffs to engage in arbitration proceedings. The company’s attorneys point to the mobile app’s terms and conditions that users sign before using the app. Those terms and conditions which require users to resolve their disputes through arbitration.
Arbitration is a form of voluntary or contracted private alternative dispute resolution, a way to resolve disputes outside of the public court system. Arbitration proceedings are generally preferred because they do not require public filings and they tend to move faster than courts.
Temu made the same argument last year and persuaded a Florida federal court to dismiss a class action suit against the company. That court found that the arbitration provision in the user agreement was valid and that users were bound by it.
In March 2024, Temu issued a statement denying the allegations in the lawsuits and said it recognized the need for greater transparency in communicating data and security practices.
Conclusion
The cases against Temu are among the latest class action lawsuits brought by consumers concerned about their data privacy. For more guidance on the interplay between sports, business, and law, reach out to a member of our team.
