Fast-fashion retailer Shein penalized with a €40 million fine due to misleading sales tactics in France
In a significant move, the French consumer protection authority, the Directorate-General for Competition, Consumer Affairs and Fraud Control (DGCCRF), has imposed a fine of €40 million on the fast-fashion retailer Shein. The penalty, announced earlier this week, was issued due to Shein's engagement in deceptive commercial practices related to pricing deals and environmental impact.
The investigation, which commenced last March, found that Shein had misled consumers in several ways. One of the key concerns was the manipulation of pricing displays to exaggerate the value of offers. The company often inflated original prices before applying discounts or ignored previous promotions when setting reference prices. As a result, 57% of reviewed promotions offered no real price reduction, 19% advertised greater discounts than were actually applied, and 11% were disguised price increases.
Additionally, Shein was found to have failed to provide accurate information about the environmental impact of its products. The company did not disclose that over 700 products sold in France release plastic microfibers during washing, as required by French regulations. Furthermore, Shein made unsubstantiated claims about reducing greenhouse gas emissions and being an environmentally responsible brand.
These practices have raised concerns about transparency in e-commerce transactions and have led to a significant fine, reflecting France's commitment to protecting consumers from deceptive marketing tactics.
Shein has accepted the fine handed down by the Paris prosecutor's office and has stated that it takes its legal and regulatory obligations in France "very seriously." The company also stated that it had taken necessary corrective action within two months of learning about the DGCCRF probe in March of last year.
Shein, which launched in France in 2015, currently holds a three percent share in the domestic clothing and footwear market, up from two percent in 2021. Despite the fine, the company remains committed to transparency and aims to address the concerns raised by the DGCCRF.
The market for clothing and footwear in France is notably fragmented, offering opportunities for new players like Shein to enter and grow. However, the fine serves as a reminder to all e-commerce businesses to ensure they are transparent and compliant with regulatory requirements.
[1] Shein's advertised promotions often offered no price reduction in 57% of cases. [2] 11% of the discounts checked during the investigation were actually price increases. [3] In 19% of cases, the price drop announced by Shein was less significant than what was actually offered. [4] Shein failed to provide accurate information about the environmental impact of its products.
- The fast-fashion retailer Shein, which faces a €40 million fine for deceptive practices, failed to provide accurate information about the environmental impact of its products.
- In the retail industry, Shein's advertised promotions often offered no price reduction in 57% of cases, and 11% of the discounts checked were actually price increases.
