Temu agrees $3m settlement over Texas data privacy claims - Retail Systems

Temu agrees $3m settlement over Texas data privacy claims By Jonathan Easton 19/10/2026 Chinese online retailer Temu has agreed to pay Texas $3 million and tighten its data protection and product safety practices following allegations that its shopping app exposed customers’ personal information and sold goods containing dangerous materials. The agreement requires Temu to store Texas shoppers’ personal data on US servers owned and controlled by American entities, restricting access from China except where necessary for essential business operations, such as fulfilling orders and preventing fraud. The settlement is the first resolution of this kind among several US state lawsuits concerning the company’s data collection practices. Texas Attorney General Ken Paxton said the agreement would prevent Temu from collecting and using Americans’ data while introducing stronger product safety requirements. Temu did not admit wrongdoing and said it had reached an agreement to resolve the dispute while continuing to serve consumers and support businesses in Texas. Under the terms of the settlement, Temu must commission annual independent product safety tests to identify potentially hazardous chemicals and materials in goods sold through its marketplace. Products found to contain dangerous substances must be removed, the responsible seller and associated stores terminated, affected customers notified and full refunds issued. The agreement specifically addresses substances including lead, formaldehyde and per- and polyfluoroalkyl substances, known as PFAS. Temu must remove products exceeding applicable safety limits within two business days and suspend the responsible sellers and associated stores within five business days, with a further $600,000 penalty for failing to meet the seller suspension requirement. The settlement also introduces annual independent security assessments of Temu’s shopping app. Texas could impose an $8 million penalty for each year in which the company violates the agreed data security provisions, according to the settlement terms. The case follows a lawsuit filed by Texas in February 2026 against Temu and its parent company, PDD Holdings. The state alleged that the companies misled consumers about the information collected through the shopping app and the extent to which sensitive personal data could be accessed or transferred to China. Temu has denied the allegations. The company faces similar legal challenges elsewhere in the US. Iowa Attorney General Brenna Bird sued PDD Holdings and Temu operator WhaleCo in July, alleging deceptive data collection, transfers of user information to China and consumer fraud. Temu had more than 82.4 million active users in the US as of September 2023, according to the Texas attorney general’s office. The settlement does not resolve the separate legal challenges brought by other states. Retail Systems has reached out to Temu for comment. Share Story: