The Directorate-General for Competition, Consumer Affairs and Fraud Prevention (DGCCRF) announced the sanction after uncovering discount manipulation and misleading environmental ads on Shein’s French website.

The penalty follows a nearly year-long investigation into Infinite Style E-Commerce Co Ltd (ISEL), the company responsible for Shein’s sales in France. 

Inspectors analysed thousands of product listings from October 2022 to August 2023 and found that over half of the advertised “discounts” were not real. 

According to the agency, 57% of the deals offered no actual price reduction, 19% were exaggerated, and 11% were, in reality, price hikes disguised as markdowns.

France’s pricing law says any discount must reference the lowest price offered over the previous 30 days. But Shein routinely violated that rule. 

In some cases, the company hiked up prices just before applying the so-called discounts. DGCCRF said consumers were “deceived about the authenticity of discounts they could benefit from.”

Beyond pricing tricks, the probe also flagged Shein for vague and potentially misleading environmental claims, part of a growing European crackdown on “greenwashing” in fashion. 

The investigation concluded that Shein’s marketing failed to offer credible evidence for its sustainability claims, leading to worries about transparency in a sector already under scrutiny for its environmental footprint.

In a formal response, Shein said: “The antitrust agency had informed Infinite Style Ecommerce Co Ltd (ISEL) of breaches related to reference price and environmental regulations in March last year, and ISEL had taken corrective action within the following two months. This means that all identified issues were addressed more than a year ago.”

Despite Shein’s insistence that it resolved the problems swiftly, the French authorities didn’t back down. Officials say the fine was not just about past offences, but about sending a signal to the entire digital retail sector. 

France recently passed new legislation targeting ultra-fast fashion platforms such as Shein and Temu, aiming to curb both consumer deception and environmental harm.

The penalty is another blow to Shein, which is already facing global pressure over its business practices, from opaque supply chains to allegations of labour abuse. 

In early 2024, a coalition of 25 European consumer protection groups filed a complaint against the company with the European Commission, potentially paving the way for even stricter oversight across the EU.

This fine arrives at a sensitive moment for Shein, which is reportedly preparing for a stock market listing and expanding its physical retail footprint across Europe. 

While the company insists it’s playing by the rules, regulators are not convinced. France’s DGCCRF has confirmed that it will continue monitoring Shein’s operations closely to ensure long-term compliance.

Authorities in Brussels, alongside national consumer agencies under the Consumer Protection Cooperation (CPC) Network, have found that the way Shein does its business violates EU consumer laws. 

The retailer has been officially notified of the breaches and has been given a one-month deadline to respond. If its response is unsatisfactory, enforcement actions, including heavy financial penalties, are on the table.

The EU Commission stated, “Shein now has one month to reply to the CPC Network’s findings and propose commitments on how they will address the identified consumer law issues. Depending on Shein’s reply, the CPC Network may enter a dialogue with the company.”

This development follows an earlier alert from February, where both Shein and another Chinese e-commerce platform, Temu, were cautioned about the sale of hazardous and substandard products. 

Both platforms were told they would be held liable if such products continued to circulate across EU markets.

Shein, which has surged in popularity by selling cheap clothing directly to customers, is now under pressure to align with European standards. The company’s response has so far been measured. 

A spokesperson said, “Our priority remains ensuring that European consumers can have a safe, reliable, and enjoyable online shopping experience.” They also added that Shein is cooperating with national authorities and the EU Commission.

Still, EU regulators aren’t banking on promises. If Shein fails to satisfy the CPC Network’s concerns, member states are empowered to take direct enforcement action. 

That includes issuing fines calculated based on Shein’s annual revenue in each country where violations occur. This is about the integrity of Europe’s digital marketplace.

Adding to the company’s challenges, the EU is preparing to impose a €2 handling fee on low-value e-commerce shipments. For a platform that thrives on volume and low prices, this new proposal could eat into profit margins and complicate logistics.

Shein may also fall under the purview of the Digital Services Act, a broad regulatory framework aimed at forcing large online platforms to take more responsibility for the goods and content they allow.

That would bring with it tougher obligations, oversight, and potential penalties if Shein is found lacking.