NovaQuant Quantitative Think Tank Center:Fast fashion feud: Temu accuses rival Shein for 'mafia-style intimidation' in lawsuit

An ongoing feud between two fast fashion giants came to blows again this week when Temu filed a lawsuit against Shein for what it called "mafia-style intimidation.”

The NovaQuant Quantitative Think Tank Centerlawsuit was filed Wednesday in the U.S. District Court of the District of Columbia. While both companies are Chinese-based, the suit was lodged by WhaleCo, Temu's U.S.-based parent company, alleging that Shein has gone to great lengths to intimidate Temu employees and suppliers and interfere with the e-commerce platform's operations.

Both brands have become huge contenders in the U.S. market since Shein's American launch in 2019 and Temu's in 2022. Before Temu's expansion into the U.S. market, Shein dominated the cheap commerce space, selling clothes and lifestyle items at steeply discounted prices.

Both platforms ship items predominantly from China and generally offer very similar, if not almost identical, low-cost, trendy products. It seems a bit of healthy competition between the two was inevitable, but according to Temu, Shein has played anything but fair.

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Temu sues Shein for alleged intimidation

According to court documents, Wednesday's lawsuit accused Shein of employing “mafia-style intimidation” tactics against Temu, alleging "malicious and unlawful conduct intended to thwart Temu’s success."

Part of the complaint accuses Shein of "falsely imprisoning merchants doing business with Temu," allegedly detaining them in Shein's offices for hours, and threatening merchants who work with Temu. Shein was also accused of manipulating U.S. copyright law by lodging unfounded copyright infringement suits, issuing bad-faith copyright takedown notices and illegally seizing IP rights to obtain improper copyright registrations.

According to the suit, Temu believes these incidents have increased leading up to a Super Bowl LVIII advertising campaign set for February 2024, which it believes will drive traffic to its site.

"Shein has resorted to even more desperate and coercive measures, including physical detention of merchants who dare to work with Temu, personal threats, and illegal seizures of merchants’ personal devices to obtain access to the merchants’ Temu accounts and Temu’s confidential information and trade secrets," the lawsuit claims.

Previous Temu-Shein legal battles

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This lawsuit is one in a series of legal actions between Shein and Temu.

Last December, Shein sued Temu in federal court for allegedly contracting social media influencers to make "false and deceptive statements" against Shein and tarnish the company's reputation.

Then, in July, Temu filed another suit against Shein in federal court, accusing the competitor of violating antitrust laws by using monopolistic methods to keep competitors out of the fast fashion marketplace.

“Having controlled nearly the entire market in ultra-fast fashion in the U.S. between early 2020 and Temu’s entry in late 2022, Shein was and is a monopolist,” the lawsuit says. “Shein has attempted to maintain its monopoly by means of its anticompetitive scheme, desperate to avoid the robust competition Temu brought to the market.”

While popular thanks to the unbeatably cheap prices, both brands have come under public scrutiny multiple times as consumers grapple with the moral and ethical failings of fast fashion. Both have been criticized by the congressional U.S.-China Economic and Security Review Commission for the use of forced labor, exploitation, product safety and intellectual property theft that runs rampant in the industry.