Arizona Attorney General Mayes suing Temu over illegally sold goods

By Howard Fischer
Capitol Media Services
PHOENIX -- Attorney General Kris Mayes is suing online retail giant Temu.
In legal papers filed in Maricopa County Superior Court, Mayes lays out a laundry list of violations of the Arizona Consumer Fraud Act by Temu and PDD Holdings, its parent company. These include selling and delivering items that do not match the description, to refusing refunds on defective items and even not delivering the items at all.
But Mayes said that's just part of the problem.
She said some of the items the China-based company offers actually are counterfeit. The list includes golf club heads claiming to have been made by Arizona-based Ping, self-defense stun guns advertised as being made by Taser, and even clothing with the logos of each of the Arizona state universities.
Potentially more serious, Mayes said her investigators have found that the company secretly gathers personal information from the phones of users, even to the point of identifying other installed apps and associated accounts, cellular data and even WiFi networks that are detected by the user's mobile device.
And she said the programs the company uses to do all that are specially designed to evade detection.
"The app is even able to go so far as to edit its own code once it has been downloaded to a consumer's phone, potentially allowing it to exploit user's personal identifying information and other data, or to otherwise control the consumer's device, in unknown and unknowable ways,'' the lawsuit says. And there even is the ability to track someone's location on a granular level, potentially down to a couple of feet.
Even those ordering online through a computer using the company's website also can have personal information stolen, according to an aide to Mayes.
And if that wasn't enough, Mayes says there's something else: who has access to all that data.
"These privacy and security risks are compounded by the fact that Temu is owned by a Chinese company (PDD Holdings Inc.), which itself is subject to Chinese law,'' Mayes said. "Defendants -- by their own acknowledgment -- have a portion of their operations located on mainland China, where cybersecurity laws allow the government unfettered access to data owned by Chinese businesses whenever it wishes.''
There was no immediate response from the company.
Temu is in many ways like Amazon. It serves as a platform through which other retailers offer their goods online.
But it also was the most downloaded app in the United States in 2023 according to the lawsuit. And it is in some ways bigger than Amazon, citing a report that says users spend almost twice the amount of time on the platform as on Amazon.
What some consumers are finding, the legal papers say, is "deceptive representations'' about the quality of the goods being sold. That is backed up with the Better Business Bureau reporting hundreds of complaints in the past year, earning Temu a rating of 2.1 out of 5 stars.
"Users experienced undelivered packages and poor customer service,'' the state is alleging. "Moreover, even when goods are delivered, they are often of low quality, contrary to Temu's marketing and representations.''
For example, the lawsuit says an Arizona customer last year ordered an air conditioning unit for about
$300. But when the unit was unboxed to install earlier this year, the technician realized that it did not include a critical electrical wire connection. But the company would not take the item back or provide a refund because the complaint came outside of Temu's internal "after-sales service period.''
Another Arizonan purchased a building block set, with the display saying the size dimensions, specific details, and the number of pieces. But none of that matched.
Temu, however, refused to accept a return and process a refund.
Mayes also cites reports that say what consumers get doesn't resemble the photos on the apps. And then there's the claim about the sale of counterfeit goods.
Then, Mayes said, there is "false reference pricing,'' claiming that the price offered was a steep discount from its regular cost. In reality, the lawsuit says, "the 'full price' is inflated, or never was real to begin with, while the 'discounted' price is merely the product's regular or market price.''
And the lawsuit cites instances of Arizonans being charged for goods not ordered or not delivered.
The legal papers also mention both U.S. government concerns and a Los Angeles Times report about merchandise being offered on Temu being produced by forced labor by China's Uyghur minority in labor camps.
All that aside, then there's the app software which Mayes said that Arizona's own forensic investigation revealed has "a host of troubling conduct.''
For example, the lawsuit says the app is designed to hide how it takes private identifiable information not only from the users but even researchers who might be investigating how the software operates. And it even contains code that allows it to reconfigure itself after having been downloaded to a user's phone, all without the user's knowledge or consent.
"This allows the Temu app to pass all required tests for approve into the Google Play Store or Apple
App Store, while retaining the ability to reconfigure itself once it has been downloaded onto a user's device,'' the complaint says. "It thus becomes pointless for Google or Apple to vet Temu for security and privacy risks, because the app is capable of changing itself after going through those tests.''
Mayes said that those actions to access data without consumer support, by themselves, violate Arizona law. And it is only exacerbated by the fact all that information could end up in the hands of Chinese government officials.
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