On Sept. 5, 2025, the Federal Trade Commission filed a Complaint for Permanent Injunction, Civil Penalty Judgment and Other Relief against Whaleco, Inc. d/b/a Temu for violations of Section 5(a) of the FTC Act and the INFORM Consumers Act. This action is the first enforcement action the FTC has taken under the INFORM Consumers Act.
INFORM Consumers Act
Congress passed the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act – or the INFORM Consumers Act – effective June 27, 2023. Under the INFORM Consumers Act, “online marketplaces” where “high-volume third party sellers” offer new or unused consumer products must collect, verify, and disclose certain information, including bank account information, tax ID information, and contact information about those sellers within 10 days. A high-volume, third-party seller is defined as a seller on an online marketplace who, over any 12 continuous months within the last 24 months, has had 200 or more separate sales or transactions and at least $5,000 in gross revenues from new or used consumer products. The goal of the INFORM Consumers Act is to add more transparency to online transactions and to deter criminals from acquiring stolen, counterfeit, or unsafe items and selling them through those marketplaces. The INFORM Consumers Act also makes sure online marketplace users have a way to report suspicious conduct concerning high-volume third-party sellers. The INFORM Consumers Act further requires that marketplaces suspend any sellers who fail to supply the required information.
Congressional Involvement
Co-sponsors of the INFORM Consumers Act, Senate Judiciary Committee Ranking Member Dick Durbin (D-IL) and Sen. Bill Cassidy (R-LA), have sent letters to 46 online marketplace companies requesting detailed information about their compliance with the INFORM Consumers Act. The inquiries follow an earlier letter to the FTC and focus on steps the marketplaces have taken to prevent the sale of stolen, counterfeit, or unsafe consumer goods. The Act mandates that “high-volume third party sellers” be identified by marketplaces to enhance transparency and accountability, helping to disrupt organized retail crime. Sens. Durbin and Cassidy emphasize that violations could lead to enforcement actions – including civil penalties or other legal remedies – by the FTC or state attorneys general. The marketplaces have been asked to respond by Sept. 12, 2025, to ensure that the INFORM Consumers Act fulfills its goal of protecting consumers
Temu Enforcement Action
Temu must pay $2 million in penalties, offer clear electronic and phone channels for reporting suspicious activity, and disclose seller information. The Complaint alleges that Temu violated the INFORM Consumers Act and Section 5 of the FTC Act by failing to provide consumers with a telephonic method to report suspicious activity and by making existing reporting mechanisms difficult to access. The Complaint also claims that Temu did not clearly and conspicuously disclose seller identity information or offer a straightforward means for consumers to send direct electronic messages to sellers; instead, users were required to navigate through multiple clicks, vague links, or excessive scrolling to access this information.
Stipulated Proposed Order
The Stipulated Proposed Order, if approved by the U.S. District Court for the District of Massachusetts, would require Temu to:
- Provide a telephonic reporting mechanism that allows consumers to listen back to, re-record, and accept any report before submitting it, and provide instructions in a way that consumers can easily hear and understand; and
- Disclose certain information as required under the INFORM Consumers Act – including electronic and telephonic reporting mechanisms and high-volume third-party sellers’ names, addresses, and a means of contacting them – in a way that is easy for consumers to notice and understand. This includes making required disclosures for gamified product listings and for all versions of the Temu online marketplace, including its smartphone app and desktop and mobile websites.
Key Takeaways
This marks the first enforcement action under the INFORM Consumers Act, and similar actions may well follow. This enforcement action signals that platforms should review compliance or potentially face similar scrutiny, as the FTC has demonstrated its commitment to actively enforcing the INFORM Consumers Act and imposing significant penalties for violators.