In just two years, Shein and Temu have quickly transformed into household names across the United States.
Millions of consumers flock to these platforms for their ultra-low prices on a wide variety of products.
According to a recent Omnisend survey, more than 57% of U.S. shoppers have made purchases on Temu in the last year alone.
However, a growing concern lies beneath the surface of bargain hunting: the hidden cost of personal data, security risks, and potential ties to the Chinese government.
A troubling 68% of American consumers continue to shop on these Chinese-owned platforms despite a deep distrust of their data privacy practices, reported ZeroHedge. Additionally, only 7% of shoppers report feeling confident about the security of their data when shopping on sites like Temu.
Both companies have significantly impacted the way Americans shop online, offering rock-bottom prices by cutting out traditional intermediaries and sourcing products directly from factories in China. Their business models allow them to deliver an impressive range of items, from clothing to electronics, at prices that seem too good to be true. Shein, for example, saw its sales soar by 43% in 2023, bringing in over $32.5 billion, while Temu’s 2023 sales exceeded $54 billion, according to ZeroHedge.
Yet, the convenience of cheap goods comes at a price, and it’s not just a financial cost.
Cybersecurity experts have consistently warned that shopping on platforms like Shein and Temu may expose consumers to significant risks. Both companies rely heavily on data collection to personalize shopping experiences, track user preferences, and improve marketing strategies, per the U.S.-China Economic and Security Review Commission (USCC).
However, the volume and types of data being collected are raising red flags.
Shein, for instance, has faced scrutiny over past data breaches, including a 2020 incident where more than 39 million customers’ credit card and personal information was compromised following a cyberattack, with over 800,000 affected consumers in New York alone. Shein was accused of downplaying the severity of the incident.
Temu, owned by the Chinese parent company PDD Holdings, has also been under investigation for security concerns.
A 2023 report by the Center for Strategic & International Studies (CSIS) uncovered that the Temu app and its sister platform, Pinduoduo, have been linked to a series of data breaches and malware incidents. In fact, Temu was briefly banned from the Google Play Store in 2023 due to security issues and malware found in its app.
Experts warn that Temu and Shein collect vast amounts of sensitive data from users, which is often sold to third parties or used for targeted marketing. The CSIS report said that in 2022, more than 80% of Temu’s revenues came not from sales of merchandise to customers but from selling advertising services to third-party retailers.
Some analysts believe that companies like Temu are not only collecting data for business purposes but may also be serving as direct tools for the Chinese Communist Party to further its influence abroad.
Research from ZeroHedge suggests that companies like Temu and Shein may be working with Chinese state-linked entities, including People’s Data, a firm reportedly connected to the Chinese government, to manipulate the control and flow of information across borders.
In 2023, the USCC warned that weak data protection policies in Temu and Shein leave consumers vulnerable to exploitation. CSIS further reported that these companies’ faulty data practices could pose risks to U.S. national security and individual privacy.
The holiday season is notorious for an increase in online scams for Americans, including phishing emails, malware attacks, and fraudulent websites that aim to exploit unsuspecting shoppers. In 2023, nearly 34 million Americans were victims of online scams, according to a report from ExpressVPN.
The Better Business Bureau’s 2023 Scam Tracker Risk Report found that more than 82% of online scams resulted in shoppers losing money.