A new class action lawsuit against Shein alleges that the company's use of discounts on nearly every item amounts to fraud, deception and false advertising.
Shopping on Shein is an almost gamified experience: Load the app or website and you'll see massive coupons and enormous discounts, like "$39.99" T-shirts marked down to $4.99.
The discounts can be hard to believe. The final prices, however, make more sense in the context of what you're buying: cheap fast fashion from China.
According to the lawsuit, the issue isn't just that Shein is offering large sales. It's that the so-called reference prices are "fake" because Shein's items are rarely or never sold at the full price, according to the lawsuit, which cites historical price data from AliPrice.com and Microsoft Shopping.
In other words, the plaintiffs are essentially accusing Shein of operating a fashion site like one of those furniture stores that always seem to have "going out-of-business" sales but never seem to go out of business.
"Shein portrays itself as a consumer-first company that 'put[s] customers at the very heart of our business' by delivering fashionable items 'accessible to all,'" reads the 60-page complaint in the case, Severino v. Shein US Services LLC. "However, its claimed 'sales' are little more than deceptions intended to entice customers to purchase items at 'discounts' relative to illusory and misleading reference prices."
Lawsuit accuses Shein of running deceptive sales
The lawsuit comes after Shein was forced to pay a 40 million euro fine in France for misleading pricing practices, and the attorneys and plaintiffs behind this class action are hoping for a similar outcome for U.S. shoppers.
The U.S. lawsuit was filed in the District Court for the Northern District of California on May 5. Shein has yet to respond in court, and the company did not immediately respond to Money's request for comment.
The company may seek to dismiss the lawsuit, while the plaintiffs will likely try to pursue a settlement on behalf of the two proposed classes: California residents who shop on Shein and a national class of shoppers, which includes anyone who purchased an item at a discount in the past few years.
The proposed national class is large, as the lawsuit argues that "all or nearly all the reference prices on the website are false and misleading." Just about everything on the Shein site is on sale, and the lawsuit argues nearly all of those discounts are "fake." Shein could try to counter in court that customers are familiar with this style of shopping experience and are not misled by its sales. However, the lawsuit argues the opposite.
"This deceptive practice has allowed Shein to reap billions of dollars in revenues from the U.S. alone, all at the expense of unsuspecting customers who believe Shein’s sales prices are genuine, discounted, bargain prices," the complaint reads.
The three named plaintiffs in the case are all Shein shoppers in California. For example, Stacee Severino bought a plus-size floral print dress in early March for $10.81, which the lawsuit says she would not have purchased if she had known the sale (a markdown from $18.59) was fake.
