French authorities announced on Thursday, July 3, a record €40 million fine against e-commerce giant Shein over “deceptive commercial practices” after a competition inquiry, saying it misled customers on price deals and on its environmental impact. The French competition and anti-fraud office said the investigation found Shein used “deceptive commercial practices toward consumers regarding (…) price reductions,” with the fine handed down with the blessing of the Paris prosecutor’s office.
The DGCCRF competition office said the nearly year-long probe found that the firm raised certain prices before lowering them. It added that the China-founded retailer had accepted the fine.
“These practices of greatly discounted prices and permanent promotions give consumers the impression they’re getting a great deal,” said the DGCCRF. If found that 11% of advertised discounts it checked “were actually price increases.”
In 57% of cases, Shein’s advertised promotions actually offered “no price reduction” and in 19% of cases, the price drop was “less significant than announced.” Launched in France in 2015, Shein has seen phenomenal growth in recent years and took its share in the domestic clothing and footwear market last year to 3% from 2% in 2021 – a significant slice in what is a notably fragmented industry.
The company, which has become a figurehead for the downside of “ultrafast fashion,” is decried in some quarters for causing environmental pollution as well as indulging in unfair competition and allowing poor working conditions.
In a statement to Agence France-Presse (AFP), Shein said it had put into action “without delay” necessary corrective action within two months after learning of the DGCCRF probe against it in March of last year. It added that it took its legal and regulatory obligations in France “very seriously” and was committed to transparency.
