Online Marketplace Temu Accused of Fake Sales in Class Action Lawsuit

Online marketplace Temu faces a class action lawsuit alleging it deceives shoppers with "fake sales" and misleading discounts. The class action lawsuit claims Temu inflates regular prices and creates a sense of urgency to pressure customers into buying before deals supposedly expire.

Temu shoppers sue over misleading discounts and inflated prices

Plaintiff Eli Silva filed the proposed class action lawsuit against WhaleCo Inc., doing business as Temu, in a California federal court on May 13, 2024. Silva accuses Temu of violating consumer protection laws by:

• Misleading Strikethrough Prices: Listing products with inflated "regular" prices crossed out, creating a false impression of a significant discount.
• Fake Sales & Limited-Time Offers: Pressuring customers to buy with countdown timers for supposedly limited-time sales that may not be genuine.

“If they had known that the products were not on sale, they wouldn’t have bought them,” Silva says. 

Temu is an online marketplace operated by the Chinese e-commerce giant PDD Holdings. It is a major competitor to Amazon, and offers ultra-cheap consumer goods which are mostly shipped to consumers directly from China. 

How fake sales and deceptive pricing hurt consumers

Advertised “sale” prices are important in consumer decision-making. Consumers are more likely to purchase an item if they know that they are getting a good deal, Silva states. Plus, if consumers think that a sale will end soon, they are likely to “buy now,” rather than wait, comparison-shop, and buy something else. 

“While there is nothing wrong with a legitimate sale, a fake one—that is, one with made-up regular prices, made-up discounts, and made-up expirations—is deceptive and illegal,” Silva says.

He says when he was last shopping online at temu.com, the company had advertised that a purported sale was going on with the products he was shopping, and that it would end when a displayed countdown expired. Silva says he thought he was getting a great deal, and hurried to buy before the deal expired, he says.

“In truth, however, the representations Plaintiff relied on were not true,” the lawsuit states. “The purported ‘regular’ prices were not the true regular prices, the purported ‘discounts’ were not the true discounts, and the discounts were ongoing—not time limited.”

Understanding deceptive pricing tactics

Deceptive pricing tricks consumers into thinking they're getting a better deal. Retailers might:

• Temporarily Inflate Prices: Briefly raise prices before marking them down to create a false sale.
• Fake Urgency: Pressure customers to buy with limited-time offers that might not be real.

The Federal Trade Commission (FTC) prohibits deceptive pricing, but states often enforce these regulations

Temu joins list of retailers facing deceptive class action pricing lawsuits

Temu is not the only company facing deceptive pricing claims. J.C. Penney is also facing a class action lawsuit in California alleging the company uses “false reference pricing schemes.” 

Foot Locker was also hit with a class action in New York for allegedly creating false urgency over products, warning customers that items were about to sell out. Old Navy reached a settlement in 2021 after it was accused of falsely inflating prices.

Temu faces additional class action lawsuit over data privacy

Beyond the deceptive pricing lawsuit, Temu is facing another class action lawsuit focused on data privacy concerns. Shoppers allege the company engages in "deceptive, manipulative, and unscrupulous practices to maximize their access to user data," potentially violating U.S. laws.

Temu deceptive pricing lawsuit seeks to compensate consumers

The temu class action lawsuit argues that Temu's deceptive pricing harms consumers by:

• Leading them to pay more than necessary.
• Pressuring them into purchases they wouldn't otherwise make.
• Disadvantage honest competitors who rely on fair pricing.

Silva seeks a court order to stop Temu's alleged deceptive advertising and compensation for affected customers nationwide.

Case Details:

• Lawsuit: Silva et al v. WhaleCo Inc.
• Case Number: 4:24-cv-02890
• Court: U.S. District Court for the Northern District of California

Plaintiffs' Attorneys:

• Jeffrey D. Kaliel and Sophia G. Gold (KalielGold PLLC)
• Scott Edelsberg (Edelsberg Law PA)