Shein pays $100 million to settle FTC probe over shipping delays

Shein has agreed to pay $100 million to settle a US Federal Trade Commission investigation into shipping delays and other customer complaints, a source with direct knowledge told Reuters on Friday. The Singapore-headquartered retailer confirmed it had reached "a constructive outcome with the FTC" and said more information would follow.

The settlement equals 44% of Shein's second-quarter profit, which fell 67% year over year to $228 million. An FTC spokesperson declined to comment. The agreement is the latest blow to a company that has absorbed a string of fines and regulatory actions across Europe and the United States this year.

The complaints are substantial. FTC records reviewed by Reuters show consumers filed more than 12,000 complaints about Shein involving more than $11 million in purchases between January 2020 and June 2026. Customers reported to the FTC and the Better Business Bureau that packages marked as delivered never arrived.

In several shipping complaints, buyers said Shein's customer service failed to resolve the problem. Reuters could not independently verify the substance of the complaints or confirm whether they were ultimately resolved. The company had warned in its July Hong Kong IPO filing that the probe could bring significant fines.

In that filing, Shein wrote that the investigation's outcome "may require us to make significant monetary payments that could have a material adverse effect on our financial condition and results of operations." The retailer sells its own-brand clothing and also runs a marketplace where third-party sellers list everything from toys to household appliances and decor.

The FTC payment follows a €40 million ($45 million) fine in France over misleading discounts and a $700,000 settlement in California over late shipments and missing delay notices or refund offers. Fashion Nova's $9.3 million penalty in 2020 and Hey Dude's $1.95 million settlement in 2023 are both far smaller.

Regulatory and market pressure

Shein shares have tumbled roughly 22% from their IPO price of 48.56 Hong Kong dollars ($6.19). Investors have been absorbing the effect of European Union fees on e-commerce packages that have dented its European business. Jefferies analysts say Shein's app downloads across ten markets fell 42% in September against a year earlier.

Fashion Nova paid its $9.3 million over shipping delays and giving gift cards instead of refunds. Crocs-owned Hey Dude settled over failures to notify customers of shipping delays and for suppressing negative reviews. Both cases show the agency has long pursued retailers over delivery practices.

Retailers have also been penalised over product claims. Backcountry.com, Bed Bath & Beyond, J.C. Penney and Nordstrom were fined a combined $1.3 million in 2015 for labelling rayon items as bamboo. The agency has pursued false "Made in U.S.A." claims too, most recently against Oak Street Bootmakers, which advertised footwear as "handcrafted 100 percent" American.

Shein remains under investigation by the European Commission over illegal products on its marketplace, and France's data protection authority fined it €150 million ($168 million) last year over improper use of cookies. The FTC settlement is one piece of a wider regulatory picture that has slowed the company's growth.

What it means for the business

We covered Shein's first report as a listed company earlier this year, when adjusted net profit fell 55.6% to $499 million on sales declines in Europe and the United States. The shares had already fallen to a record low then, and the 22% slide from the IPO price extends that retreat.

The company, founded in China and headquartered in Singapore, has seen its growth brake as regulators on both continents close in. Shein's own explanation for the shares' weakness points to a confluence of regulatory pressures, weaker financial results and higher logistics costs.

The marketplace side of the business is also the part drawing scrutiny. The European Commission's investigation into illegal products and the FTC's delivery complaint records both concern a platform where third-party sellers and cross-border logistics are hard to police.

The July IPO filing flagged the risk in advance, and the settlement now converts that risk into a known cost. Shein has said additional information will be shared soon, and the terms beyond the headline sum have not yet been published.

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Images: Shein