The INFORM Consumers Act, which took effect in June 2023, was enacted to combat counterfeit online sales by requiring improved transparency on online marketplaces. The act specifically requires prominent and accessible reporting mechanisms on the product listings for all high-volume third-party sellers, as well as identification information about the sellers, so that consumers can report suspicious activity related to the sellers either electronically or by telephone. The act defines high-volume third-party sellers as sellers that do not have contractual relationships with the marketplace, have had 200 or more separate transactions of new or unused consumer products, and have more than $5,000 in gross revenues for the previous 12 months. The act also requires online marketplaces to collect and verify the bank information, contact information, and tax ID number of high-volume third-party sellers operating on their sites and to suspend any sellers who do not provide this information.

Temu connects international third-party sellers with consumers through its gamified shopping online platform. The government’s complaint accused Temu of failing to provide shoppers a telephonic reporting mechanism, failing to disclose electronic and telephonic reporting mechanisms in an easy-to-notice and -understand way, failing to provide one-click access to the reporting tools, and failing to present the reporting mechanisms in each medium and interface through which shoppers may access Temu’s online marketplace. Temu was also accused of failing to provide names, physical addresses, and contact information for high-volume third-party sellers as required by the act. In cases where the information was provided by Temu, the complaint alleged that shoppers were required to scroll far down the page and click through numerous small or vague links to access sellers’ identity information, constituting another violation of the act.

The parties agreed to a settlement, with Temu neither admitting nor denying the allegations. As part of the settlement agreement, Temu committed to pay a $2 million civil penalty. Violators of the INFORM Consumers Act are subject to the civil penalties of the FTC Act, which carry a maximum penalty per violation of around $53,000; however, the settlement agreement does not spell out how the $2 million figure was reached. Notably, the FTC referred the matter to the DOJ to file the complaint, likely in order to circumvent the Supreme Court of the United States’ 2021 ruling in AMG Capital Management v. FTC, which restricts the FTC’s ability to seek equitable monetary relief.

The settlement also requires Temu to take a number of steps to rectify its alleged noncompliance with the act, including:

• Introducing a telephonic reporting mechanism that provides clear audio instructions for making a report and allows consumers the opportunity to listen back and re-record any reports
• Providing one-click access to any electronic reporting mechanism for deceptive sellers
• Ensuring reporting mechanisms are present in every format of Temu’s online marketplace, including mobile apps
• Placing sellers’ identity information at the top or in the body of the product listing page in a larger and contrasting font to make the disclosure more conspicuous
• Providing one-click access to any direct electronic messaging services featured on the product listing

In addition to this substantial penalty, the settlement requires substantial reporting and recordkeeping from Temu. Notably, though the DOJ brought the complaint, Temu is required to provide reports only to the FTC. Temu must make a report one year after the settlement identifying:

• The primary physical, postal, and email addresses and phone number for Temu
• All of Temu’s businesses by their names, telephone numbers, and physical, postal, email, and internet addresses
• Descriptions of the activities of each of Temu’s businesses
• Detailed descriptions of how Temu remains in compliance with each section of the settlement

For the next 10 years, Temu must also inform the FTC within 14 days of:

• Changes to any point of contact at Temu
• Any change to Temu’s corporate structure, including the creation, sale, merger, or dissolution of any Temu entity
• Any bankruptcy or insolvency petition filed against Temu

The settlement also requires Temu to maintain certain records for the next 10 years, including:

• Accounting records of all goods or services sold
• Personnel records for Temu employees involved in keeping Temu in compliance with the INFORM Consumers Act
• Records of all consumer complaints, refund requests, and Temu responses to those complaints and refund requests

Additionally, Temu must also respond to any ad hoc requests from both the FTC and DOJ for additional compliance reports or other requested information. Notably, despite this long list of business conduct requirements, the settlement does not require a monitor or assessor of Temu’s actions, something that the FTC would have historically imposed under prior administrations.

There has been notable bipartisan support for the INFORM Consumers Act, likely due to prevalent fraudulent behavior from sellers on online marketplaces. In August 2025, US Senate Democratic Whip Dick Durbin and Republican Senator Bill Cassidy sent letters to 46 companies that operate online marketplaces to request information on efforts the companies have taken to comply with the act and to hold high-volume third-party sellers accountable for violations. This bipartisan interest will likely lead to heightened regulatory scrutiny of online marketplaces, including potential congressional hearings or further inquiries on the behaviors of e-commerce companies. This added risk means online marketplaces should keep on top of their compliance with the act and policing of fraudulent third-party sellers operating on their sites.

The FTC’s action against Temu reinforces the fact that the current agency administration under President Trump continues to be invested in taking steps to protect American consumers from fraudulent third-party sellers and scammers. The complaint and settlement send the message to other online marketplaces that compliance with the INFORM Consumers Act will be enforced and that the marketplaces themselves are obligated to prevent third-party sellers from hawking stolen, counterfeit, or damaged goods on their sites. Pursuing third-party sellers is difficult for the FTC and DOJ given the sheer number of sellers operating on online marketplaces and the fact that many are international sellers. The FTC thus makes clear through this enforcement action that it will be aggressively monitoring online marketplaces to determine their compliance with the INFORM Consumers Act. Online marketplaces should engage in robust efforts to ensure they are fully following the requirements of the act and consider efforts to police the sellers on their sites.