Temu and Shein, two leading China-based ecommerce platforms that have skyrocketed in popularity in the US. are facing yet another scrutiny in the US. Two commissioners of the Consumer Product Safety Commission (CPSC) are calling on the agency to investigate them following reports that they sold “deadly baby and toddler products” on their websites.

For context, in May, South Korea found that children’s products sold on Shein contained toxic substances way above accepted levels. Then in August, The Information reported that padded crib bumpers were available on Temu’s platform in the US while the product was banned by the US two years back as it posed a suffocation hazard.

Similarly, drawstring hoodies for children and toddlers were easily available on Shein even as US regulators have warned that the product poses the risk of strangulation.

CPSC Commissioners Call for an Investigation into Temu and Shein

In their joint statement, commissioners Peter A. Feldman and Douglas Dziak said that they are “aware of recent media reports that deadly baby and toddler products are easy to find on these platforms.”

Calling upon the CPSC to investigate foreign ecommerce platforms like Shein and Temu, they said, “We expect agency staff to investigate the companies’ safety and compliance controls; relationships with third-party sellers and consumers; and any representations they make when products are imported.”

To be sure, Shein and Temu are facing scrutiny in several regions as regulators have been worried about the quality of products on their platforms. Notably, in April, the EU added Temu and Shein to the category of “very large” platforms which means they would face greater scrutiny under the bloc’s Digital Services Act.

Meanwhile, the joint statement from CPSC commissioners said that they seek to better understand how these platforms are using the “de minimis” rule. Notably, the business model for Temu and Shein revolves around the “de minimis” provision of Section 321 of the Tariff Act of 1930, which waives import tariffs if the value of imported shipment does not exceed $800.

As a result, they carry very little inventory in the US, and while they can’t match the kind of delivery speed that Amazon promises they more than offset it with cheaper prices. The proposition is quite attractive for many users who can wait for products like apparel and fashion accessories while paying a much lower price.

Are Chinese Companies Exploiting the De Minimis Rule?

Many US lawmakers allege that these companies evade tariffs by exploiting the de minimis rule. They are totally correct, though they are legally taking advantage of the problematic tax code. A report released by the House Select Committee on the Chinese Communist Party found that Shein and Temu accounted for 30% of the shipments made under the de minims rule.

Meanwhile, last month, a bipartisan group of lawmakers which include Senate Finance Committee Chairman Ron Wyden and Banking Committee Chairman Sherrod Brown along with Republican Senator Susan Collins proposed a bill to curb the apparent exploitation of the de minimis rule by Temu and Shein. The bill proposes to ban imports of textiles and apparel under the provision while levying a $2 shipment fee on all other legit orders.

Another perennial controversy that Temu and Shein have been battling and was flagged by the CPSC commissioners is their relationship with third-party sellers on the platform and their lax security and compliance mechanism.

Reports suggest both companies may not be doing enough to ensure their supply chains are free from forced labor, highlighting ethical concerns. Allegations of Chinese companies using forced labor – especially in the country’s Muslim-majority Xiangjiang province – are not new, even as the Communist country vehemently denies these claims.

Lawmakers Are Worried that Shein and Temu Could Share Data of US Citizens

Then there are fears that Chinese companies like Temu and Shein could exploit the data of US citizens. According to Chinese law, they could be forced to assist in national intelligence efforts, likely including sending US user data to the government.

A 2023 report by the US-China Economic and Security Review Commission highlighted Shein’s data collection policies and said, “The company’s app also requests that users share their data and activity from other apps, including social media, in exchange for discounts and special deals on Shein products.”

In December the House Committee on Energy and Commerce sent Shein a letter that sought its response on the company’s data collection policies as well as its relationship with the Chinese government. Incidentally, a similar letter was sent to TikTok which now faces prospects of getting banned in the US.

Temu and Shein are quite popular among US buyers, especially those looking for bargain deals. Amid the growing popularity of these platforms, Amazon is also reportedly looking to launch a similar platform.

https://twitter.com/RebeccaYChan/status/1809456137734947304

A Wall Street Journal report said that earlier this year, Amazon held its invite-only meeting with Chinese merchants to brief them about the plan. Citing the slide presentation, the report said, Amazon “unveiled a plan to debut a new channel on its platform to sell unbranded fashion wear and household products from China.”

Are Temu and Shein Safe?

All said, while Temu and Shein can offer really cheap products, buyers have to be very cautious about their quality. Ilan Shapiro, a pediatrician, and chief health correspondent and medical affairs officer with AltaMed Health Services told Business Insider that buyers should be especially cautious buying products like toys, feeding supplies, car seats and accessories, and strollers on such platforms. Don’t cheap out on products and toys for your kids, especially on sites like Temu and SHEIN, where dangerous products are commonplace.

He said, “If you’re buying, you have to understand you’re not getting all the safety and quality that you can get from other retailers” Shapiro added, “Maybe the price is extremely affordable, but that doesn’t mean that it’s the best thing for our children.”

He particularly warned about some products like

  • Toys with small pieces
  • Things that go to the mouth like bottles and cups
  • Products that are otherwise tightly regulated in the US as the same regulations might not be followed in China.

Don’t Blindly Trust Ecommerce Platforms

While buying products on Shein and Temu, buyers should be watchful that they might not meet the stringent safety standards in the US – which in fact is among the key reasons that they are dirt cheap.

While products like apparel and fashion accessories should be generally fine, one should be cautious while buying products for children as well as cosmetics for adults. You never know whether that makeup or lotion is dangerously contaminated (or just totally fake).

But then, in general, one has to be cautious about buying such products online. In a recent such case, tattoo ink sold on Amazon’s platform was recalled as they were found to be contaminated with antibiotic-resistant bacteria, making the product a severe safety hazard. The inks were produced by a company named Sierra Stain, based in Carson City, Nevada, and sold under the Bloodline brand.

Many experts believe that you probably shouldn’t buy products like supplements and tattoo inks through third-party seller platforms. Several studies have shown the presence of counterfeit products on online platforms.

As for Chinese ecommerce platforms like Temu and Shein, one should ideally refrain from buying such high-risk products even if they appear much cheaper than others. For someone who already bought products for kids through these platforms, make sure that they are high quality and not a choking or strangulation hazard.