PDD Holdings' (PDD) subsidiary Whaleco, which runs the online shopping platform Temu, will pay a $2 million penalty to settle claims that it violated the INFORM Consumers Act, a law designed to protect consumers, the US Department of Justice and the Federal Trade Commission said Monday.

The complaint alleged that Temu failed to display third-party seller information clearly and didn't consistently provide a way report "suspicious marketplace activity" on mobile platforms and within its "gamified" product listings, the FTC said in a statement.

In addition to the civil penalty, the proposed order requires Temu to implement measures to ensure compliance with the INFORM Act, the DOJ said.

The case was brought by the DOJ's Consumer Protection Branch and the US Attorney's Office for the District of Massachusetts in coordination with FTC, marking the first enforcement action under the INFORM Act.

PDD didn't immediately reply to a request for comment from MT Newswires.

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