Temu agrees to $3 million settlement with Texas over data privacy claims

(Web Desk) - Chinese online retailer Temu has agreed to settle data privacy claims brought by Texas and restrict its handling of shoppers’ personal information in the state, according to documents made public on Friday.

The settlement marks the first resolution of such claims against Temu by a US state. Texas officials said the company had also agreed to keep personal data on US servers and limit the information transferred to China.

Temu will be required to transfer only information necessary to complete transactions, such as shipping addresses, to China.

Texas had alleged that the company used code allowing excessive access to users’ devices, raising concerns about potential data collection and security risks. Temu has denied the allegations and wrongdoing.

Under the agreement, Temu will conduct annual independent product safety tests to identify goods containing dangerous chemicals or materials. It must remove unsafe products, terminate the relevant sellers and their affiliated stores, notify affected Texas consumers, and issue full refunds.

Texas Attorney General Ken Paxton said the settlement also requires Temu to introduce stricter product audits and safety standards to protect consumers from hazardous materials in products, including clothing and children's items. He said the agreement would prevent the company from collecting and using Americans’ data.

Temu will pay $3 million to Texas under the settlement. The state said violations of specified data security provisions could result in a penalty of up to $8 million for each year in which a violation occurs.

The agreement also requires Temu to hire an independent cybersecurity auditor to examine the app’s code for malware and spyware, concerns that prompted Texas to file a lawsuit in February.

Several US states have sued Temu following reports alleging that the company and its parent, PDD Holdings, used intrusive mechanisms in their applications. Temu did not immediately respond to a request for comment.

Temu had more than 82.4 million active users in the United States as of September 2023, according to the Texas attorney general’s office.