Shein Reveals FTC Probe of U.S. Business Ahead of Hong Kong IPO, Warning of Material Payments
Updated
Updated · CNBC · Jul 28
Shein Reveals FTC Probe of U.S. Business Ahead of Hong Kong IPO, Warning of Material Payments
3 articles · Updated · CNBC · Jul 28
Summary
Shein disclosed in its Hong Kong IPO filing that the FTC is investigating its U.S. business, marking the first public acknowledgment of the probe.
The company said it is cooperating with the FTC but cannot predict the outcome or timing, and warned any settlement or other resolution could require significant payments that materially hurt results.
Shein did not say what triggered the investigation, though the FTC polices deceptive or unfair practices including misleading pricing, shipping and refund issues, privacy concerns and so-called dark patterns.
Countdown timers, flash sales and gamified discounts are common on Shein's app, and the FTC has previously cited countdown timers as one example of dark-pattern tactics.
The disclosure lands as Shein prepares for a Hong Kong listing after abandoning U.S. and then London IPO plans amid political scrutiny of its business practices; its Hong Kong listing has been approved, but trading timing remains unclear.