By Kelly Cloonan

Whaleco, operator of the online marketplace company Temu, will pay a $2 million civil penalty to settle allegations that it failed to help consumers avoid stolen, counterfeit or unsafe goods on its site.

Temu's actions violated the INFORM Consumers Act of 2023, which requires online marketplaces to give consumers the tools they need to report suspicious activity from high-volume, third-party sellers, the Federal Trade Commission said Friday. It also requires sites to disclose identifying information for many of those sellers, including their physical address and contact information so consumers can reach the sellers directly.

The company failed to provide consumers with a way to report suspicious marketplace activity by telephone, according to the complaint. The FTC said that when a reporting mechanism was provided it was difficult for consumers to access.

Temu also failed to provide tools for reporting product listings in its gamified shopping experiences until November 2024, the complaint said. Gamified shopping allowed consumers to play games, spin wheels, earn coupons and participate in other activities.

Additionally, for part of the time the act has been in effect, Temu failed to clearly disclose required information about third-party sellers as part of its gamified product listings and for its mobile website, the complaint said.

Under the proposed consent order, Temu will be required to provide consumers with a means to report suspicious activity through their telephones. Temu will also be required to disclose its electronic and telephonic reporting mechanisms and high-volume third-party sellers' personal information in a way that is easy for consumers to find and understand.

Write to Kelly Cloonan at kelly.cloonan@wsj.com

(END) Dow Jones Newswires

September 05, 2025 17:48 ET (21:48 GMT)

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