The cost of cheap clothes: Shein’s fast fashion empire faces EU reckoning

From fake discounts to missing contact details, Shein is under fire from Irish and EU watchdogs over alleged legal breaches

Shein routinely uses fake discounts, which seem to offer better deals by showing price reductions, but these reductions are not actually based on prior prices, as required by EU law. Picture: Paulo Nunes dos Santos/Bloomberg

Chinese fast fashion brand Shein is usually in the news because of its poor human rights and environmental record. This week, its anti-consumer practices came under the spotlight.

The Competition and Consumer Protection Commission (CCPC), along with the European Commission and national consumer authorities in Belgium, France and The Netherlands have called on Shein to rectify several practices on its platform that potentially breach EU consumer law.

Shein routinely uses fake discounts, which seem to offer better deals by showing price reductions, but these reductions are not actually based on prior prices, as required by EU law.

They also use pressure tactics: using false deadlines to make consumers feel they have to act now or lose out on a bargain. The consumer body says the site also displays incomplete and incorrect information about a consumer’s rights to return goods and receive refunds.

There’s also deceptive labelling, where it’s suggested the product offers something special when in fact the relevant feature is required by law. 

Misleading claims is another issue. This is where the site gives false or deceptive information about the sustainability benefits of certain products.

And if you want to contact Shein with questions or complaints, you’re going to have trouble finding its contact details — another potential breach of consumer law.

The CCPC says information has been requested to assess the company’s compliance with further obligations, including those around product rankings, ratings and reviews, and third-party sellers.

Shein now has one month to propose commitments on how it will address the identified consumer law issues. Picture: Reuters/Dado Ruvic/Illustration

Last April, Shein was designated as a Very Large Online Platform under the Digital Services Act. Shein then had four months to comply with the most stringent obligations applicable to these platforms. These include the obligation to assess and mitigate any systemic risks stemming from its services.

The European Commission is currently carrying out a preliminary Digital Services Act investigation of Shein that concerns, among other things, the presence of illegal content and goods on Shein’s marketplace, the transparency of its recommender systems and measures to mitigate risks relating to consumer protection, public health and users’ wellbeing.

The ongoing investigation, which is being carried out through the European Commission’s Consumer Protection Cooperation (CPC) network is co-led by the CCPC, together with consumer authorities in Belgium, France and The Netherlands under the coordination of the European Commission.

In response Shein said it has "been working constructively with national consumers authorities and the EU Commission to demonstrate our commitment to complying with EU laws and regulations, and we are continuing to engage in this process to address any concerns. Our priority remains ensuring that European consumers can have a safe, reliable, and enjoyable online shopping experience."

Shein now has one month to propose commitments on how it will address the identified consumer law issues. Depending on its reply, the CPC may enter a dialogue with the company, and if it does not address the concerns identified, national authorities may take enforcement measures to ensure compliance. Any resultant fines will be based on the company’s annual turnover in the relevant member states.

Patrick Kenny is a member of the CCPC. He says consumers should be allowed to shop without being put under pressure by fake deadlines or misled by fake discounts.

They also need clear information about how consumers can contact the company, how to return an item and receive a refund. In this case, the CCPC and the CPC network have identified several practices that could mislead consumers or undermine their consumer rights.

"E-retailers and online marketplaces have a legal obligation to provide transparent and honest information about the products they sell, and consumers’ rights around returns. The CCPC takes any breaches of the law very seriously and looks forward to constructive engagement with Shein during the course of this investigation.”

Boots Ireland pleaded guilty to breaking sales-pricing legislation. File picture

The big problem with Shein is, of course, its contribution to ecological degradation and abusive labour practices. A recent BBC investigation into the online retailer found workers were routinely spending 75 hours a week bent over sewing machines — in contravention of China’s own labour laws. In 2023, the company admitted to finding two cases of child labour in its supply chain.

The company’s runaway success has been built on selling dresses and tops that cost next to nothing, which is a seductive business model in an era of runaway inflation on almost everything else.

But i n a world in climate crisis, how we choose to spend our money today has a direct impact on the lives of others. Buying cheap clothes that don’t last is getting more and more difficult to justify.

Meanwhile, the CCPC has also been busy bringing Irish-based retailers into line with sales pricing legislation. In the Dublin District Court on Monday, Boots Retail (Ireland) Limited pleaded guilty to breaking this legislation.

The pharmacy and beauty chain was ordered by Judge Anthony Halpin to pay €1,000 to the Little Flower Penny Dinners charity and to pay the costs of the Competition and Consumer Protection Commission. Section 1 of the Probation of Offenders Act "is to be applied upon compliance with the court order".

The prosecution was brought by the CCPC against Boots Ireland following online sweeps conducted over the 2023-2024 winter sales season, including Black Friday.

CCPC chair Brian McHugh: 'Businesses need to be able to compete for consumers openly and honestly on price.'

This case forms part of the first wave of prosecutions under sales pricing legislation introduced in 2022, after Lifestyle Sports, DID Electrical, and Rath-Wood also pleaded guilty to breaking the same legislation in March of this year.

The law requires traders to base any discount on the lowest price in at least the previous 30 days, and to display this price clearly on any price tag or advertisement.

Suppose, for example, a product is priced at €1,649 from December 23, 2024, to January 24, 2025. On  January 25, 2025, until February 8, 2025, the price of the product is increased to €1,949. On February 9, 2025, the price is reduced to €1,579 with an indicated prior price of €1,949 in the price reduction announcement, despite the lowest price in the previous 30 days before this reduction being €1,649.

If a trader increases the price of a product for a short period before immediately reducing the price back to its previous price, the trader can’t use this briefly-increased price as the prior price in its price reduction announcement, as this is not the lowest price in at least the previous 30 days.

Chairperson of the CCPC, Brian McHugh, pointed out that misleading sale discounts harm consumers and harm competition.

“Businesses need to be able to compete for consumers openly and honestly on price. Transparency around sales discounts allows consumers to make informed decisions about their purchases and to shop with confidence.”