The European Union has formally warned fast-fashion giant Shein that it risks substantial fines unless it swiftly remedies a range of consumer protection violations. In a sharp escalation of regulatory scrutiny, the European Commission and the network of national consumer authorities have issued a detailed list of practices that contravene EU law—and given Shein just one month to propose how it will address each concern. If Shein fails to comply, individual member states may launch enforcement actions that could levy fines tied to the company’s annual turnover across the EU.

Probe Targets Unsafe Products and Unfair Practices

In February, EU officials undertook a joint investigation with national consumer authorities under the Consumer Protection Co-operation (CPC) network, focusing on online marketplaces and platforms that facilitate cross-border sales. Shein, renowned for its rapid turnaround of ultra-cheap apparel and accessories, quickly became a priority due to repeated complaints from consumers and local watchdogs about defective and potentially dangerous products. The probe has since expanded to examine not only product safety but also Shein’s compliance with rules on returns, contractual clarity, pricing transparency, and marketing practices.

Among the specific issues flagged were multiple reports of children’s clothing labeled with hazardous levels of lead paint, home textiles treated with banned chemicals, and children’s toys sold without proper age warnings or safety certifications. Although Shein has repeatedly stated that it tests its goods for compliance, EU regulators are concerned that the sheer volume of fast-fashion items—often produced by numerous small, contract manufacturers across Asia—makes it difficult for Shein to guarantee consistent safety standards.

Beyond outright product risks, the CPC network’s findings indicate that Shein’s prominently advertised “free returns” policy is often misleading. A growing body of evidence suggests that while Shein markets free shipping on returns, many European consumers have encountered unexpected restocking fees or flat-rate return charges that eat into their purchasing budgets. In some cases, local postal authorities and courier firms have refused to honor Shein’s return label vouchers, forcing shoppers to pay out of pocket. Under EU law, sellers must make return costs transparent at the time of purchase; failure to do so can be deemed an unfair commercial practice.

Opaque Contract Terms and Unclear Guarantees

Another core complaint centers on Shein’s standard terms and conditions, which critics say are excessively lengthy, difficult to navigate, and sometimes contradictory across different EU countries. Consumer groups have documented instances where Shein’s site lists one refund policy in English, another in German, and yet another in French, with subtle but crucial differences in time limits and procedures. That fragmentation is at odds with EU regulations requiring uniform, clear information on withdrawal rights, delivery deadlines, and warranty claims.

For example, under the EU Consumer Rights Directive, customers must be granted a minimum 14-day “cooling-off” window during which they can return an item for any reason and receive a full refund—without penalty. However, many Shein buyers have reported that when exercising their right to cancel orders, they receive only store credit instead of original payment, or face extended delays in reimbursement. In some cases, Shein’s system automatically deducts a “handling fee” from the refund siloed under the guise of restocking costs. Such actions not only flout EU regulations but also leave consumers unaware of their statutory rights until problems arise.

The CPC’s questionnaire also queries Shein on how it communicates critical information—such as country of origin, fabric composition, and estimated delivery times—to ensure compliance with the Unfair Commercial Practices Directive (UCPD). Under the UCPD, businesses must avoid misleading omissions or false claims that may distort consumer choices. Yet far too often, Shein’s product pages have been criticized for vague sizing guides, insufficient detail about materials, and images that feature models wearing unrepresentative prototypes rather than actual, mass-produced merchandise. This lack of transparency makes it hard for buyers to assess quality or make informed comparisons—an obvious breach of consumer-protection tenets.

Data Privacy and Remarketing Tactics in Regulators’ Crosshairs

While merchandise safety and contractual clarity are at the forefront of the current probe, EU regulators are also eyeing Shein’s data collection and remarketing practices. Over the past year, digital rights organizations have flagged Shein’s aggressive use of targeted advertising—via email, push notifications, and social media retargeting—to lure users back onto the platform. Many of these messages deploy psychologically engineered “limited time” deals and countdown timers, pressuring consumers to complete purchases before an advertised discount expires. Under the EU’s Unfair Commercial Practices Directive, such tactics can be deemed exploitative if they mislead or coerce shoppers into impulse buying under false pretenses.

Moreover, Shein’s mobile app has attracted scrutiny for excessively intrusive data permissions—requesting access to precise GPS location, camera, contacts, and device identifiers that far exceed what is necessary to process orders. Under the GDPR and e-Privacy Directive, companies must obtain specific, informed consent for the collection of personal data that is not strictly essential to the transaction. EU privacy regulators have already opened separate inquiries into Shein’s compliance with those standards. Should Shein be found to violate data-protection rules, it could face simultaneous fines on both consumer-protection and privacy fronts.

In parallel with the CPC’s probe, Shein may soon face obligations under the EU’s landmark Digital Services Act (DSA), which came into force in August of last year. The DSA imposes new responsibilities on online intermediaries—particularly those deemed “Very Large Online Platforms” (VLOPs) reaching more than 45 million monthly active users in the EU. Although Shein’s precise European user base is not publicly known, its explosive growth suggests it likely surpasses that threshold. VLOPs must comply with stringent requirements on content moderation, risk assessment, and transparency reporting under the DSA; failure to do so can trigger fines of up to 6 percent of global revenue.

While the DSA’s provisions primarily address illegal or harmful content on social networks and marketplace platforms, the act also obliges VLOPs to ensure that their terms and conditions, recommender systems, and advertisement practices do not endanger consumer rights. For Shein, this could translate into mandatory disclosures about algorithmic ranking of products, more robust reaction to consumer complaints about falsified reviews or counterfeit listings, and proactive measures to prevent unsafe items from being advertised. The EU has warned that non compliance with the DSA could result in substantial penalties—potentially eclipsing fines from the CPC network.

Proposed “Low-Value” E-Commerce Fee Adds Pressure

In an additional twist to Shein’s EU challenges, Brussels has put forward a proposal to impose a €2 handling fee on incoming “low-value” e-commerce shipments (those valued under €150) from outside the EU. The so-called “anti-dumping” fee aims to equalize the cost of postal services by discouraging non-EU sellers from exploiting heavily subsidized domestic mailing rates. If adopted, this fee would be levied at the point of entry, directly increasing the landed cost for end consumers. For a platform like Shein—known for its rock-bottom pricing, achieved in part through low-cost Chinese postal channels—the added €2 surcharge could create a notable price spike in the final checkout.

Shein’s management has publicly criticized the proposal, arguing that it unfairly targets all small imports rather than focusing on unscrupulous sellers who flout customs duties. Critics of the proposed fee, however, contend that it will force platforms like Shein to internalize more of their shipping costs, making it harder to undercut local competitors. In the context of the CPC probe, the e-commerce fee proposal injects yet another layer of compliance complexity: Shein will need to reevaluate its entire pricing model for EU markets if the fee comes into effect.

In its formal notification, the Consumer Protection Co-operation network has given Shein exactly one month—until June 28—to respond to the detailed list of alleged transgressions. Shein must either acknowledge each infringement or provide a coherent plan to rectify the deficiencies. That could include revising return policies to fully absorb shipping costs, harmonizing terms and conditions in all EU languages, strengthening product testing protocols, and overhauling its data-collection consent mechanisms.

If the CPC network deems Shein’s proposed commitments unsatisfactory, it may engage in further dialogue or, in a worst-case scenario, launch enforcement measures. Enforcement could vary from national agencies issuing fines—based on Shein’s annual turnover in the affected member states—to requiring injunctive orders that compel the removal of non-compliant terms or advertising practices. Under EU consumer law, fines can range up to 4 percent of global annual revenue for serious breaches, although competition bodies might negotiate remedial undertakings before resorting to punitive sanctions.

Shein’s Response: Emphasizing Safety and Collaboration

In response to the EU’s warning, Shein issued a statement underscoring its “commitment to ensuring a safe, reliable and enjoyable online shopping experience for European consumers.” The company said it is “actively working with national consumer authorities and the European Commission” to address identified issues. However, digital rights groups and local consumer federations have demanded greater transparency into Shein’s supply chain and more rigorous testing of imported goods.

Observers note that Shein’s European operations have grown at a breathtaking pace—its mobile app frequently appears at the top of download charts in major markets such as Germany, France and Italy. To sustain this momentum, Shein will need to demonstrate it can meet EU regulatory expectations, both in letter and spirit. That requires extensive coordination with hundreds of third-party factories, logistics providers, and fulfillment centers across Europe.

The case against Shein underscores a larger trend: EU policymakers are increasingly focused on holding overseas e-commerce platforms to the same standards as domestic retailers. In recent years, several national authorities have fined U.S.-based e-tailers for failing to honor EU warranty and return rules. With Shein’s market share climbing, Brussels wants to ensure that consumers are not misled by ultralow prices that mask hidden fees, security risks, or unclear contractual terms.

The Commission’s dual focus—enforcing consumer protection via the CPC network and strengthening digital market rules under the DSA—reflects a drive to modernize Europe’s regulatory toolkit for the age of globalization and fast-paced online retail. The next few months will test whether Shein can overhaul its practices in time or whether it will join a growing list of platforms forced to pay for non-compliance. For now, the clock is ticking: if Shein cannot reassure Brussels with concrete reforms, steep fines and stricter oversight may lie ahead.

(Adapted from Bloomberg.com)

Categories: Regulations & Legal, Strategy