Kentucky Sues Temu Over Allegations of Data Theft, Infringing on Copyright of Jim Beam, Buffalo Trace, Maker’s Mark

(AP Photo/Jeff Chiu, File)

Kentucky Attorney General Russell Coleman on Thursday announced the filing of a lawsuit against the popular Chinese shopping website Temu, alleging the company has been illegally collecting data from users and sharing it with the Chinese government; stealing intellectual property of Kentucky brands such as Buffalo Trace, Maker’s Mark, Jim Beam, University of Kentucky, University of Louisville and Churchill Downs; and violating U.S. trade policies by using “forced labor from Chinese ethnic minorities.”

Coleman claims that Temu was the U.S.’s most downloaded mobile app in 2023 and has used its popularity to collect customer data without their knowledge or consent.

“Temu’s cheap products and flashy marketing hide real danger. Their platform can infect Kentuckians’ devices with malware, steal their personal data and send it directly to the Chinese government,” Coleman said in a news release. “At the same time, they’re eroding trust in some of Kentucky’s most iconic brands, which could lead to job losses and hardship. Kentuckians need a strong defense against this aggression, and that’s exactly what the Attorney General’s Office intends to do.”

The lawsuit claims Temu is notorious for consumer fraud across the board, from falsely advertising items, to faking customer reviews and even using customer payment information to order items the customer didn’t ask for.

The Attorney General furthermore accuses Temu of “engaging in bad faith in the course of dispute resolution with their customers.” The complaint says that Temu’s terms of service “purports to require” that any disputes between a consumer and Temu be resolved through binding arbitration. According to the complaint, this means consumers are required to surrender their Seventh Amendment right to a jury trial and are instead submitted to “an extra-judicial dispute resolution process through a third-party arbitrator that is not subject to judicial review.”

The complaint also says Temu has refused to arbitrate with customers who have disputes, citing McMahan, et al. v. Whaleco Inc., a court case filed in the Eastern District of New York that seeks to compel Temu to follow through with arbitrations filed by at least several thousand customers. In that case, the plaintiffs claim that prior to filing an arbitration, customers must conduct a settlement conference “in good faith to attempt to resolve the parties’ disputes.” These pre-arbitration conferences, according to the Attorney General, are used to gather information and scare the consumer “with threats of sanctions should they proceed with their claims.”

The Attorney General’s complaint says these “bullying and obfuscating” tactics violate the Kentucky Consumer Protection Act.

The lawsuit seeks damages of $2,000 for every violation of the Kentucky Consumer Protection Act.