On September 5, 2025, the Federal Trade Commission (FTC) announced its first enforcement action under the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act of 2023 (the INFORM Act), against Whaleco. Inc., which runs the online marketplace Temu. Pursuant to the landmark settlement, Temu must pay $2 million in civil penalties, provide consumers with a clear reporting mechanism (both electronic and telephonic) to report suspicious activity, and clearly disclose seller information. This action signals that platforms should review their compliance protocols or risk facing similar scrutiny.
What is the INFORM Consumers Act?
Congress passed the INFORM Act in 2023 to enable consumers to identify and report suspicious activity in order to reduce the sale of counterfeit, unsafe, or stolen goods. To comply with the INFORM Act, at a high level, online marketplaces must collect, verify, and disclose specific information and provide reporting mechanisms for any high-volume, third-party sellers. The INFORM Act further requires that marketplaces suspend any sellers who fail to supply the required information. A high-volume, third-party seller is defined as a seller on an online marketplace who, over any 12 continuous months within the last 24 months, has had 200 or more separate sales or transactions and at least $5,000 in gross revenues from new or used consumer products.
The FTC’s Case Against Temu
The complaint alleges Temu violated the INFORM Act and Section 5 of the FTC Act by failing to give consumers any telephonic mechanism to report suspicious activity, and by making it difficult to access any of the reporting mechanisms. The FTC also alleges that Temu failed to provide consumers with the sellers’ identity information and the means of sending direct electronic messages to sellers in a clear and conspicuous manner. According to the complaint, consumers needed to click through several times, follow vague links, or scroll down on the interfaces to access this information or send direct messages to sellers.
Key Takeaways
- The FTC is actively enforcing the INFORM Act. The FTC’s case against Temu demonstrates its commitment to actively enforcing the INFORM Act and imposing significant penalties on non-compliant marketplaces.
- Compliance Must Be Accessible. This action emphasizes that the FTC will be monitoring whether companies make disclosures easy for consumers to notice and minimize the steps required to access mandatory information. Simply having a policy or a difficult-to-find link may be deemed insufficient.
