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Teenage TikTok user Emily spent hours gaming but got nothing. As the video became viral, thousands of people responded and more TikTok users started using their referral codes.
The addictive in-app games have driven the business to become among the biggest fast-fashion companies worldwide by helping it develop at an amazing speed. Six different games on the app—including the one Emily was playing—can be accessed from four EU countries as well as the United States and the United Kingdom. The games promise users to win free credit or “free gifts” valued up to 3,000 euros.
Experts caution that Shein’s actions might violate consumer law and lead to fines in billions of euros for possible legislative violations of the European Union’s rules controlling large internet companies. Through progress indicators, timers, and pop-ups showing all the goodies other people get for absolutely free, the program also offers a gamified experience encouraging users to join.
Source: Shein
Since April, the European Commission has closely watched Shein, a retailer known for its “free gifts” game. Under the EU’s Digital Services Act, the store has been classified as a “very large online platform,” so Shein comes under direct oversight. Together with seventeen other national consumer groups, the BEUC recently sued Shein’s Chinese rival Temu for allegedly using coercion under the new rule.
The “bait and switch” systems of the game as well as the use of fake timers and cryptic progress bars could cause Shein to violate the Digital Services Act as well. The European Commission has asked Shein and Temu more questions on how they guarantee their activities follow the Digital Services Act. Shein and Temu have to answer, thereafter, the Commission could start legal actions against both businesses.
The fine might run to 1.7 billion euros. Shein has already come under fire for using forced labour in its supply chain, and environmental activists have pointed out the sustainability issues raised by low price fast fashion sales.
For Shein, the increased scrutiny from European authorities comes at a pivotal point since a UK-based human rights group has petitioned the British regulator in charge of stock market listings to stop Shein’s London IPO owing to claims of forced labour.
