Temu Will Pay Texas $3 Million and Keep Texans' Data on U.S. Servers to Settle Lawsuit
The settlement also requires yearly product safety testing, with refunds for Texans who bought anything found to contain harmful substances.
The online retailer Temu will pay Texas $3 million and store Texans' personal data on American-owned and controlled servers in the United States to settle a lawsuit brought by Attorney General Ken Paxton, his office announced Friday.
Paxton sued PDD Holdings Inc. and WhaleCo Inc., which do business as Temu, in February. The state accused the company of deceiving consumers and exposing Texans' sensitive data to the Chinese Communist Party. The case was filed in the 471st District Court in Collin County, according to the agreed final judgment.
What Temu must do
Under the settlement, Temu must:
Store Texans' personal data on American-owned and controlled servers in the U.S. and restrict access to it by people and entities based in China, subject to essential business functions.
Pay an $8 million penalty for each year it violates the data security terms.
Pay $3 million to the state.
Conduct annual independent product safety testing. If a product is confirmed to contain harmful substances, Temu must remove it, cut off the seller and its affiliated stores, notify Texas buyers and give full refunds.
According to Texas Scorecard, the testing covers a cross section of products commonly bought by Texans for materials including lead, formaldehyde and heavy metals, and flagged products must come down within two business days.
No admission of wrongdoing
Temu denied the allegations, and the judgment says nothing in it is an admission of any violation of law. A company spokesperson told Texas Scorecard the company "has come to an agreement to resolve this matter as we continue to focus on serving consumers and supporting businesses across Texas."
Paxton's office said Temu had more than 82.4 million active U.S. users as of September 2023.
What it means for shoppers
Cheap goods carry hidden costs when nobody checks what is in them or where your data goes. The refund and notice requirements give Texas families something concrete. It is the second action this week by Paxton's office over harmful substances in children's products, after his lawsuit against Gerber and Nestle over heavy metals in baby food.
