Is Shein in Trouble in the US as the FTC Investigates its Business Practices?
Recent headlines haven’t been altogether kind to fast fashion company Shein, with the China-based fast fashion brand having recently disclosed a $99 million quarterly loss — tied to the end of the de minimis exemption as well as tariff pressures, in addition to other headwinds — and ongoing concern about its loss of valuation over the course of the past few years.
Now, another roadblock has been placed in the retailer’s path, according to CNBC’s Gabrielle Fonrouge, with news emerging that Shein is under investigation by the Federal Trade Commission (FTC) regarding its U.S. business. In documents related to its upcoming Hong Kong IPO, Shein disclosed that the FTC was probing stateside business operations — but the reasoning behind the investigation remains unclear.
“We are actively cooperating with the FTC… Although it is possible that we may reach a settlement with the FTC in connection with the investigation, we currently cannot predict the probable outcome of the investigation and the timing of such outcome, and we cannot rule out that such outcome could occur in the near term,” Shein wrote in said documents, also noting that the possibility of having to make monetary settlement was in play.
Shein says it's under investigation by the Federal Trade Commission as it prepares for Hong Kong IPO https://t.co/g724gnBxGz
— CNBC (@CNBC) July 28, 2026
And while the FTC did not respond to request for comment from the news outlet, Fonrouge did speculate that the concerns being probed could be linked to so-called “dark patterns” — described as “design tricks and psychological tactics, such as pre-checked boxes, hard-to-find-and read disclosures, and confusing cancellation policies” which are leveraged to create an incitement to buy — which Shein has been accused of deploying.
“Shein is known to offer countdown timers, gamified discounts and flash sales, among other tactics, on its app to create a sense of urgency and get consumers to spend,” Fonrouge wrote.
“In a 2022 report explaining dark practices, the FTC referenced countdown timers in general as one example of a common dark pattern,” she added.