Which? recently published research about pricing practices in the UK, and we've written before about the attention the CMA and ASA pay to misleading pricing. The issue is top on regulators' priority lists.
At EU level, the Consumer Protection Cooperation (CPC) Network of national consumer authorities and the European Commission have been investigating the online marketplace and e-retailer SHEIN and say that several practices on its platform, including relating to pricing, infringe EU consumer law.
The practices in question are:
- Fake discounts: pretending to offer better deals by showing price reductions that are not based on the actual previous prices.
- Pressure selling: putting consumers under pressure to complete purchases using tactics like false purchase deadlines.
- Missing, incorrect and misleading information: displaying incomplete and incorrect information about consumers' legal rights to return goods and receive refunds and failing to process returns and refunds in accordance with consumers' relevant rights.
- Deceptive product labels: using product labels that suggest that the product offers something special when, in fact, the relevant feature is required by law.
- Misleading sustainability claims: Providing false or deceptive information about the sustainability benefits of its products.
- Hidden contact details: Consumers cannot easily contact SHEIN to ask questions or make complaints.
In addition, the CPC Network requested information from SHEIN to assess if it is complying with further obligations under EU consumer law, such as ensuring that product rankings, reviews, and ratings are not presented to consumers in a misleading manner. The Network is also investigating whether SHEIN informs consumers about how the obligations under the contract are shared between a third-party seller and SHEIN (where applicable) and that consumer rights do not apply to the contract in cases where the third-party seller is not a trader.
This enforcement action is complementary to the ongoing Digital Services Act inquiry which is being conducted by the Commission. Under the DSA, the Commission is looking at the presence of illegal content and goods on SHEIN's marketplace, the transparency of its recommender systems, and measures to mitigate risks relating to consumer protection, public health and users' wellbeing.
SHEIN now has one month to reply to the CPC Network's findings and propose commitments on how they will address the identified consumer law issues. Depending on SHEIN's reply, the CPC Network may enter a dialogue with the company. If SHEIN fails to address the concerns raised by the CPC Network, national authorities can take enforcement measures to ensure compliance. This includes possible fines based on SHEIN's annual turnover in the EU member states concerned.
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