First INFORM Consumers Act Enforcement Action Results in $2 Million Penalty for Temu

On September 5, the government filed a complaint in the District of Massachusetts against Whaleco, Inc., d/b/a Temu, underscoring that online marketplaces must:

1. Adequately provide consumers with required information about certain sellers’ identities.
2. Clearly and conspicuously disclose a mechanism for reporting suspicious marketplace activity.

Noncompliance can lead to monetary penalties and additional FTC compliance obligations.

What Does the INFORM Consumers Act Require?

The INFORM Consumers Act is intended to increase transparency and deter stolen, counterfeit, or unsafe goods on consumer-facing “online marketplace[s].” An “online marketplace” includes any person or entity that operates a consumer-facing electronic platform used by third-party sellers to sell, store, ship, or deliver products in the United States, and that has agreements with consumers governing purchases on the platform.

The Act imposes compliance obligations on online marketplaces regarding “high-volume third party seller[s],” defined as participants who, within any continuous 12-month period in the past 24 months, have made at least 200 separate sales of new or unused consumer products and earned at least $5,000 in total revenue. For such sellers, online marketplaces must:

1. Collect and verify specified seller identity information (and suspend noncompliant sellers).
2. Clearly and conspicuously disclose required seller contact and identity information to consumers.
3. Clearly and conspicuously provide, on product listings, a method for consumers to report suspicious activity to the online marketplace.

A violation of the Act constitutes an unfair or deceptive act or practice under the FTC Act.

Enforcement Action Clarifies Compliance Obligations

Numerous high-volume third-party sellers list consumer products on Temu’s platform. Consumers can browse product listings in two main ways:

1. Standard browsing via Temu’s homepage or search results.
2. “Gamified” shopping experiences where consumers can play games, spin wheels, or earn coupons while viewing abbreviated versions of product listings.

On September 5, the United States, on behalf of the FTC, filed the first INFORM Consumers Act enforcement action when it filed a complaint against Temu, alleging two counts.

Count I: Failure to Provide and Clearly Disclose Reporting Mechanisms

Temu allegedly failed, at times, to provide any mechanism for consumers to report suspicious marketplace activity. Although the Act became effective in June 2023, Temu did not offer a telephonic reporting mechanism until January 2024, and its gamified shopping experience lacked any electronic or telephonic reporting mechanism until November 2024. Where Temu did implement reporting tools on product listings, they allegedly did not do so in a clear and conspicuous manner. For example, consumers were required to navigate unclear hyperlinks and multiple steps to submit a report electronically or request a callback.

Count II: Failure to Clearly Disclose Required Seller Identity Information

Temu allegedly failed to clearly and conspicuously disclose mandatory seller identity information, across interfaces, including on the mobile website and the gamified views. For example, Temu did not add links to store information on abbreviated product listings in gamified experiences until June 2025. Even when present, disclosures often required users to scroll below the fold or click multiple vague links (e.g., “See more” or “See all”) to access seller identity information. Additionally, Temu does not provide consumers with sellers’ full names and physical address information in order confirmations, other post-purchase messages, or in account transaction histories.

According to the complaint, the FTC sent Temu a pre‑effective‑date letter outlining the Act’s requirements. On September 8, the court entered a stipulated order enjoining Temu from failing to provide and clearly disclose electronic and telephonic reporting mechanisms and from failing to clearly disclose high‑volume seller identity information. The order imposes a $2 million civil penalty, and also includes ongoing compliance reporting, recordkeeping, and monitoring obligations.

Key Takeaways

The first enforcement action under the INFORM Consumers Act underscores the need for online marketplaces to audit all interfaces to ensure compliance. In particular, online marketplaces should:

• Review product listings for high-volume third-party sellers across all interfaces, and apply disclosures to all user experiences.
• Provide both electronic and telephonic reporting mechanisms on each high-volume seller listing, displayed clearly and conspicuously.
• Disclose required seller identity information without requiring excessive clicks, scrolling, or vague links.
• Ensure required disclosures appear not only on product listings, but also in order confirmations and within account transaction histories, as applicable.
• Collect, verify, and annually certify required seller information.

If your company has questions about complying with the INFORM Consumers Act, please contact the authors or your usual AFS contact.