Shein’s cash gifts similar to Temu’s raise privacy concerns

Chinese online retailer Shein appears to be pursuing a similar strategy to its younger competitor Temu, which recently came under criticism for offering cash gifts in exchange for permanent access to extensive personal customer data.

Fast-fashion giant Shein has launched a series of promotions on its app such as ‘Magic Draw’, ‘Draw Easy’, ‘Free Gift’ and ‘Spin to Win’. These giveaways promise rewards such as ’10 Free Gifts’ worth up to $800 and up to £300 in Shein credit.

However, to access the “gifts,” customers must sign up to the app and provide personal information that could be transferred outside the UK, including to China.

In Shein’s privacy policy, a clause regarding the transfer of personal data states: “When you access or use our Services, your personal data may be processed or transferred outside the United Kingdom, including to the United States, the European Union, China and/or Singapore.”

“Such countries or jurisdictions may have less stringent data protection laws than those in your country of residence.”

Shein’s track record on data protection has been mixed in the past. In 2022, Zoetop, the owner of Shein and its sister company ROMWE, was fined $1.9 million by New York State following an investigation into a 2018 cyberattack that compromised the personal information, including credit card details, of 39 million accounts.

Shein said: “We treat all customer data in strict compliance with local data protection laws. These measures mean that our consumers’ data is treated in accordance with applicable laws and regulations while maintaining high standards of confidentiality and integrity.”

Last month, Temu launched a cash prize draw, offering new customers £50 if they signed up, downloaded the app and shared an invitation code.

The terms and conditions initially required them to permanently refrain from the use of personal information, including “their photograph, name, voice, opinions, statements, biographical information and/or their hometown and state for promotional or advertising purposes in any media worldwide” without being informed of the use of that information.

Temu had described these conditions as “standard”, but later adjusted them because they were “too broad”.

The company denies that it sells user data. A spokesperson said: “The use of freebies is common practice among companies in numerous industries, including competitors like Shein, whose current promotions include nearly identical terms and conditions.”

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“Temu collects user information solely for the purpose of providing our service and improving the customer experience.”

The UK data protection authority, the Information Commissioner’s Office (ICO), said it is continuing to investigate the concerns raised.

An ICO spokesperson said: “Organisations must be clear and transparent about how and why they collect and use people’s personal data and ensure that people can make a fully informed choice about whether to share their data.

“We always urge people to be vigilant when providing their personal information online and if anyone has concerns about how their data is being used they can contact the ICO or visit our website for advice and support.”

Although Temu and Shein are based in China, they would fall under the UK and EU GDPR rules if they offer goods or services to individuals in those markets. Violations of these rules can result in a fine of up to four percent of global turnover.

Both Chinese-owned online marketplaces are known for selling outrageously cheap products, beating out competitors like Zara and H&M. Shein’s slogan is “Save money. Live in style!” while Temu’s slogan is “Shop like a billionaire.”

But their ability to sell products such as clothing, accessories and home goods at knock-down prices has raised questions about controversial business practices.

An investigation in the US found that Temu’s products pose an “extremely high risk” of forced labour in the US. However, it says the company is not responsible for third-party use of its platform.

Shein is also reportedly facing nearly 100 lawsuits for copyright infringement, which the company denies.

The company is currently considering an IPO in New York or London. Concerns about the company’s ties to China have unsettled US lawmakers. Senator Marco Rubio warned that the company is “subject to the whim of the Chinese government and, by extension, the Chinese Communist Party.”

Shein was founded in China and later moved its headquarters to Singapore in 2022. The company has expanded rapidly through aggressive marketing, especially on social media platforms like TikTok, where users often showcase their purchases.

Temu, which launched in the US in 2022 and the UK the following year, has experienced equally explosive growth.