Key Highlights:

• Suit alleges laundry list violations of Arizona Consumer Fraud Act
• Mayes accuses China-based company of selling counterfeit items
• Investigators found company secretly gathers personal information from users’ phones 

PHOENIX — Attorney General Kris Mayes is suing online retail giant Temu. In legal papers filed in Maricopa County Superior Court, Mayes lays out a laundry list of violations of the Arizona Consumer Fraud Act by Temu and PDD Holdings, its parent company. These include selling and delivering items that do not match the description, refusing refunds on defective items and even not delivering the items at all.

But Mayes said that’s just part of the problem.

She said some of the items the China-based company offers are actually counterfeit. The list includes golf club heads claiming to be made by Arizona-based Ping, self-defense stun guns advertised as made by Taser, and even clothing with the logos of each of the Arizona state universities.

Potentially more serious, Mayes said her investigators have found that the company secretly gathers personal information from users’ phones, even identifying other installed apps and associated accounts, cellular data, and even WiFi networks detected by the user’s mobile device. And she said the programs the company uses to do all that are specially designed to evade detection.

“The app is even able to go so far as to edit its own code once it has been downloaded to a consumer’s phone, potentially allowing it to exploit user’s personal identifying information and other data, or to otherwise control the consumer’s device, in unknown and unknowable ways,” the lawsuit says. And there is even the ability to track someone’s location on a granular level, potentially down to a couple of feet. Even those ordering online on a computer using the company’s website can have their personal information stolen, according to an aide to Mayes.

And if that wasn’t enough, Mayes says there’s something else: who has access to all that data. “These privacy and security risks are compounded by the fact that Temu is owned by a Chinese company (PDD Holdings Inc.), which itself is subject to Chinese law,” Mayes said. “Defendants —by their own acknowledgment —have a portion of their operations located on mainland China, where cybersecurity laws allow the government unfettered access to data owned by Chinese businesses whenever it wishes.”

There was no immediate response from the company.

Temu is in many ways like Amazon. It serves as a platform through which other retailers offer their goods online. But it also was the most downloaded app in the United States in 2023, according to the lawsuit. And it is, in some ways, bigger than Amazon, citing a report that says users spend almost twice as much time on the platform as on Amazon.

What some consumers are finding, the legal papers say, is “deceptive representations” about the quality of the goods being sold. That is backed up by the Better Business Bureau, which has reported hundreds of complaints in the past year, earning Temu a rating of 2.1 out of 5 stars. “Users experienced undelivered packages and poor customer service,” the state is alleging. 

“Moreover, even when goods are delivered, they are often of low quality, contrary to Temu’s marketing and representations.” For example, the lawsuit says an Arizona customer last year ordered an air conditioning unit for about $300. But when the unit was unboxed for installation earlier this year, the technician realized it lacked a critical electrical connection. But the company would not take the item back or provide a refund because the complaint occurred outside Temu’s internal “after-sales service period.”

Another Arizonan purchased a building block set with a display showing the dimensions, specific details, and the number of pieces. But none of that matched. Temu, however, refused to accept a return and process a refund. 

Mayes also cites reports that say what consumers get doesn’t resemble the photos on the apps. And then there’s the claim about the sale of counterfeit goods. Then, Mayes said, there is “false reference pricing,” claiming that the price offered was a steep discount from its regular cost. In reality, the lawsuit says, “the ‘full price’ is inflated, or never was real to begin with, while the ‘discounted’ price is merely the product’s regular or market price.”

And the lawsuit cites instances of Arizonans being charged for goods not ordered or not delivered. The legal papers also mention both U.S. government concerns and a Los Angeles Times report about merchandise being offered on Temu being produced by forced labor by China’s Uyghur minority in labor camps.

All that aside, there’s the app software, which Mayes said Arizona’s own forensic investigation revealed has “a host of troubling conduct.”

For example, the lawsuit says the app is designed to hide how it collects private, identifiable information not only from users but also from researchers who might be investigating how the software operates. And it even contains code that allows it to reconfigure itself after having been downloaded to a user’s phone, all without the user’s knowledge or consent.

“This allows the Temu app to pass all required tests for approval into the Google Play Store or Apple App Store, while retaining the ability to reconfigure itself once it has been downloaded onto a user’s device,” the complaint says. “It thus becomes pointless for Google or Apple to vet Temu for security and privacy risks, because the app is capable of changing itself (ITALICS) after (ROMAN) going through those tests.”

Mayes said that those actions to access data without consumer support, by themselves, violate Arizona law. And it is only exacerbated by the fact all that information could end up in the hands of Chinese government officials.