Why Shopping App Temu Could Be Cause For Consumer Concern
If you hadn't yet heard of Temu, chances are you would have soon. Consider it a wannabe Amazon, another morally questionable online retailer with prices so low you can understand why an inflation-plagued consumer would want to take advantage. And it's only getting more popular — unique visitors in the U.S. Catapulted from 5.1 million at the time of its launch in September 2022 to 70.1 million by February 2023, the Los Angeles Times reported per Insider Intelligence. At the time of this writing, it was the #1 free app on the Apple App Store, besting YouTube TV, TikTok and Instagram, as well as WhatsApp, Facebook and (believe it or not) Amazon.
Though PDD Holdings, the Chinese company that owns Temu, is based in Shanghai, Temu itself is based in Boston. Still, that fact hasn't stopped lawmakers and government officials from throwing flags regarding the retailer's origins and business practices. In April, the U.S.-China Economic and Security Review Commission released a report mentioning both Temu and Shein, an extremely popular fast-fashion website, as "two Chinese companies of concern over issues related to exploitation of trade loopholes, product safety, forced labor, violations of intellectual property rights and more," the Times summarized. (Both websites, which Insider noted share many similarities, have also filed lawsuits against one another.) But when you can buy a knock-off JBL speaker for $11.49 or an Apple Watch dupe for $16.88, can you blame the average cash-strapped consumer for overlooking supposed shadiness in exchange for a good deal?
It's sketchy, but … ?The quality of Temu's products might not be amazing, but Leezan Da, a financial adviser, told the Times she doesn't mind. "What you get is what you pay [for]," Da said. "Don't pay much, that's what you get. I don't complain about it." She said she would recommend the app to friends. Similarly, Brianna Lukey said she was initially hesitant to try Temu, but feels much better about it now. "I know there's a lot of things that go around that may not be legit," she told Time. "But this was." On the App Store, Temu has a 4.6 out of 5-star rating from 508K reviews.
"The question 'is Temu legit' is presently ubiquitous on the internet thanks to Temu's aggressive ad buys, its apparent comfort at operating at a loss, and its flashy low prices," Snopes reported in June. "On the one hand, you will likely be able to buy and eventually receive cheap products that are similar to the products advertised on its site. In that sense, the website is 'legit.'"
Unreliable and unsustainableIf you're wondering how Temu can afford to court consumers with such wildly low prices and deals, it's probably because it can't. "There's absolutely no way Temu runs a profitable retail business," Juozas Kaziukenas, founder of e-commerce research company Marketplace Pulse, told the Times. "They are effectively buying market share and hoping in the years to come that market share will stick."
Experts have also alleged that Pinduoduo, another e-commerce app from Temu parent company PDD Holdings, contains malware and spies on its users, CNN reported in April. "We haven't seen a mainstream app like this trying to escalate their privileges to gain access to things that they're not supposed to gain access to," Mikko Hyppönen, chief research officer at a Finnish cybersecurity firm, told the outlet. "This is highly unusual, and it is pretty damning for Pinduoduo." Temu was not "implicated" in CNN's investigation, it noted.
Moreover, Temu is not accredited by the Better Business Bureau (which could just mean it has not asked for accreditation, as it costs a fee), and boasts a current customer rating of 2.51 out of 5 stars; 931 complaints were closed in the last year. "They're making delivery promises, and people aren't getting their stuff when they're supposed to be," BBB's Melanie McGovern told Time in 2022. "While there is presently no evidence that Temu itself is malware," Snopes added in its June analysis, "the corporate history and business ethics of PDD Holdings makes these concerns legitimate, as well."
Perhaps most damning, however, is a new report from market research company and short seller Grizzly Research that describes Temu as "the most dangerous malware/spyware package currently in widespread circulation." According to company CEO Siegfried Eggert, the Temu app contains so-called "self-compiling software" that circumvents your phone's malware detection abilities and allows PDD to illegally steal your data, he told CNBC's "Last Call." Eggert said he is in active conversations with a "range of regulatory agencies" in the U.S. Regarding his company's report.
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WITH mascara on sale for just 98p and electronic tablets listed for less than £100, it seems shoppers can't resist new bargain-bin sales website Temu.
But as its popularity surges, politicians and security experts are warning that the true cost of the Chinese-owned shopping app could be far greater.
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PDD boss Lei Chen is in charge of Temu9
Mum Jade Brogden kitted out her daughter's bedroom for £50 but fears the app 'spies' on herCredit: Glen MinikinThere are growing fears in the UK and US that Temu could be harvesting personal data for use by China's Big Brother state.
Since its UK launch this year, the app — which promises users they can "shop like a billionaire" — has been downloaded nine million times by UK consumers, according to data firm Apptopia.
It is now one of the world's most popular apps, rivalling Amazon, thanks to its low prices and a relentless social media ad blitz.
Parent company PDD Holdings' US-traded shares jumped on Tuesday morning after the platform reported revenue of £5.7billion in the quarter to June — up 66 per cent on last year.
The company has seemingly come from nowhere to amass a value of £107billion.
The fears that such Chinese apps may be mining customers' data for blackmail and spying purposes stem from the fact that they can tell how long shoppers have looked at certain products and how many times they revisit certain pages.
This can be used to build data profiles, so companies can target people with ads featuring products they will be more inclined to buy.
But this can potentially be used for more sinister purposes.
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WhatsApp reveals major change that's perfect for camera shy usersProfessor Sarah Morris, a digital forensic expert at Southampton University, said: "The more places that have and share your data, the more people can build a larger profile, and that can lead to consequences in terms of identity theft and can even profile and pick out people, which is never a good thing.
"In terms of espionage, if you are looking for someone and able to identify a habit and build up a profile, that can certainly give you an advantage and lead to potential opportunities for harm."
Tory MP Sir Iain Duncan Smith warned: "These Chinese companies like Temu are data harvesters and want your private details. The US is convinced of this.
"Chinese firms like Temu are subject to China's national security laws. They have to hand over this information to the government if it asks.
"I've been warning for ages that these companies target the young in the West, harvest their social media, private information, and can use that against you later. That is why they glean all this intelligence on us."
PDD Holdings' other app Pinduoduo was suspended by Google in March after malware coding was discovered in some versions of it.
Google said it had taken down the shopping platform from its online store amid "security concerns".
But despite the fears, Temu is the UK's most downloaded app this year as we grab bargains — such as a man's chest bag for just £2.47, the same price as a manicure and pedicure kit, while a massage gun is £12.37 and mascara just 98p.
There is also a £98.49 tablet computer, which Temu says was £209.99, and an air fryer priced at £53.89.
Mum-of-four Jade Brogden furnished her daughter's bedroom for just £50 using the app.
The 27-year-old costume designer, from Mirfield, West Yorks, bought sea-themed blankets, stuffed animals, pictures, stickers, lights, ornaments and other decorations and said: "If I'd bought it all from a shop in Britain I'd have paid almost £300."
But Jade is concerned about the app's apparent ability to spy on her.
She said: "I was talking one day about needing a new sofa and suddenly my social media feeds were flooded with Temu adverts for sofas.
"But Temu has been launched at a time when people like me desperately need bargains. It's so useful, I feel as if I can't afford not to use it."
Data harvestersAt this year's Super Bowl — America's most watched sports event — a 30-second Temu ad featuring the "shop like a billionaire" promise was shown twice during breaks, costing the firm an estimated £11million.
The sudden rise of Temu has been fuelled by its "affiliate and influencer" programmes, which reward users for bringing in more punters.
The website claims that if you sign up as an affiliate and bring in a new customer, you get a £3 referral fee and up to 20 per cent commission on anything they buy.
If you join Temu's influencer programme you can get up to £300 of free products and earn up to £100,000 a month in "affiliate cash".
Users are flooded with notifications inviting them to spin a roulette wheel for prizes or scratch a virtual scratchcard for offers.
The app even has a video game, Farmland, where you can win free goods for tending virtual crops.
Neil Saunders, of data analytics firm GlobalData, said: "Special offers and countdowns are not unusual, but Temu takes it to a whole new level — they just plaster them all over the app. It keeps customers coming back."
But with so many deals on offer, analysts think Temu is currently selling at a loss, which they say is designed to increase market share over global rivals such as Amazon.
The key to the low prices is a lack of brands, and shoppers buying direct from Chinese factories, with Temu the only middleman.
Last month a Sun investigation revealed how the site has been plagued by negative reviews, claims of undelivered parcels and poor customer service.
Most concerning of all, a US congressional committee report has warned that Temu's suppliers could be using forced labour in China's Xinjiang province.
There the Chinese government has been accused of genocide, targeting the Muslim Uyghur people.
Undercut rivalsChloe Cranston, of UK charity Anti-Slavery International, said: "The Chinese government has been undertaking a massive system of persecution of the Uyghur people across the region using internment camps, mass surveillance and torture.
"The UN human rights chief has concluded that this abuse may constitute crimes against humanity. It's a massive state-enforced system of forced labour across the region in numerous industries."
The news was a potential concern for shopper Ksenia Temel, who bought a dress on the site for just 69p.
The 42-year-old child carer, from Greenwich, South East London, said: "I get so many compliments when I wear my 69p dress.
"But I'd stop buying from Temu if I discovered the items were made by child or slave labour."
Temu's owner, PDD Holdings, is the brainchild of Chinese-born former Google worker Colin Huang, 43, who set it up in 2015.
He is now China's youngest self-made billionaire, with a fortune of £25billion, according to Bloomberg, but he stepped down from its day-to-day management in 2020.
It is now run by his countryman Lei Chen.
PDD has been accused of exploiting tax loopholes around the world to undercut rivals and legally avoid paying taxes on its goods.
The firm is able to avoid paying import duties on products coming into the UK.
Earlier this year, according to filings in the US, Temu's parent company moved from China to Dublin, where its global headquarters is now an anonymous office building that once housed a EuroStore — the Irish equivalent of a pound shop.
Ireland is well known for its low tax rates, and Richard Murphy, Professor of Accounting Practice at Sheffield University's Management School, said: "There are many good reasons to be worried about Temu's business model.
"Its choice of Dublin for its HQ suggests it is looking to exploit all the tax opportunities Ireland still provides to web-based companies.
"VAT receipts apart, it looks likely that it adds no value at all to the UK economy, but it undermines local businesses and the jobs they provide."
Temu did not respond to requests to comment.
Temu by numbers
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An item Jade purchased from TemuCredit: Glen Minikin9
Massage gun is £12.37, usual price £45Credit: Temu9
Chest bag is £2.47, usual price £22.95Credit: Temu9
Manicure/pedicure kit is £2.47, usual price £7.89Credit: Temu9
Mascara is 98p, usual price £6.999
Android tablet is £98.49, usual price £189.999
The Sun's findings on Temu last week
