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Fast-fashion retailer Shein has been fined €40mn by French regulators, a record penalty, for misleading consumers on price reductions and environmental commitments.
An 11-month investigation found that Shein had engaged in “misleading commercial practices towards consumers on the reality of the price reductions granted and on the scope of the commitments concerning environmental claims”. Shein has accepted the fine.
The China-founded retailer has grown rapidly over the past five years to become a major force in fashion retailing across the western world.
The company, which routinely bombards customers with discount offers, made $1bn net profit on revenues of $38bn in 2024, the Financial Times previously reported.
It is currently seeking to list on the Hong Kong stock exchange after efforts to float in New York and London ran into difficulty.
The fine announced on Thursday resulted from a joint investigation — between France’s antitrust authorities and its national investigation service, the SNE — that ran from October 2022 to August 2023.
French regulations require discounts to reflect the lowest price charged during the preceding 30 days. French authorities found that Shein and its subsidiary Infinite Style E-Commerce Co Ltd (ISEL), which handles European sales, did not take into account previous reductions and at times increased prices before offering discounts, violating the rules.
Investigators found 57 per cent of promotions they examined offered no price reduction: in 19 per cent of cases the reduction was less significant than announced and 11 per cent were, in fact, price increases.
They also found that Shein was “unable to justify the environmental claims made on its website,” noting that a message stating it was a “responsible company” that would seek to limit its environmental impact by reducing its greenhouse gas emissions by 25 per cent was misleading.
Shein, which ships orders of cheap clothes directly from Chinese factories to consumers’ homes, said it had taken steps to rectify the breaches after it was notified by the regulator last year.
The company added there was no impact on prices paid by customers.
“All identified issues were addressed more than a year ago,” Shein said, adding that it was committed to complying with French rules.
But Shein is the subject of investigations across multiple fronts in Europe.
The European Commission is investigating whether Shein is violating European consumer protection rules by selling illegal products. Brussels is also examining whether Shein pushed unfair contract terms, misleading price reductions and unfair commercial practices.
Separately, the Commission is looking into whether Shein has violated the Digital Services Act, which polices the behaviour of large online platforms.
In that probe, which is expected to wrap up in the coming months, Shein risks fines of as much as 6 per cent of its worldwide annual turnover.
The probes are part of a wider crackdown by the bloc on the rapid increase in low value imports from China, which are not currently subject to import taxes. The EU is planning to impose a €2 charge on such parcels.
Additional reporting by Laura Onita
