Overview

On September 5, 2025, the Federal Trade Commission (FTC) announced a settlement with Whaleco, Inc., which operates the online marketplace known as Temu. The settlement resolves allegations that Temu violated the INFORM Consumers Act and Section 5(a) of the FTC Act by failing to provide required disclosures and reporting mechanisms for suspicious marketplace activity, and failing to clearly disclose seller identities and contact information. 

Summary of the INFORM Consumers Act

The INFORM Consumers Act, effective June 27, 2023, requires online marketplaces to collect and verify certain information about high-volume third-party sellers, defined as participants on an online marketplace platform with at least 200 transactions and $5,000 in gross revenue in a 12-month period. 

When it comes to high-volume third-party sellers with $20,000 or more in annual gross revenue, additional disclosure requirements apply. Specifically, online marketplaces must disclose those sellers’ full names, physical addresses, and contact information to consumers in a clear and conspicuous manner. 

Marketplaces must also give consumers a mechanism to report suspicious marketplace activity on product listings of any high-volume third-party seller. 

Summary of the Temu case

The FTC’s complaint, filed by the Department of Justice on the FTC's behalf, alleged that Temu failed to comply with several key requirements of the INFORM Consumers Act. For example, the FTC says Temu did not provide a telephonic reporting mechanism for suspicious marketplace activity until long after the INFORM Consumers Act went into effect, and when Temu eventually added such a mechanism, it was hard to access. The complaint further alleged that Temu failed to provide any reporting mechanism (electronic or telephonic) in its gamified shopping experiences until November 2024. When it did add a mechanism, the FTC alleged it was not clear and conspicuous.

According to the FTC, Temu also failed to disclose the full names and physical addresses of high-volume third-party sellers on product listings across all interfaces consumers use to access the Temu online marketplace. Further, where disclosures were made, the FTC alleged that they were, once again, often not clear or conspicuous. Thus, the required disclosures and reporting mechanisms were not present or easily accessible across all user interfaces and shopping modes. 

To resolve these allegations, Temu agreed to a stipulated order that includes a $2 million civil penalty and a permanent injunction against future violations. 

Compliance tips for online marketplaces

Although this is the first INFORM Consumers Act action since the law went into effect, chances are it is not going to be the last. The FTC has recently faced increased pressure to bring enforcement actions under its INFORM Consumers Act authority, and this case could signal heightened scrutiny in response. State attorneys general also have the power to enforce it. Thus, now is a good time for platforms to review their compliance programs. This includes ensuring:

• All reporting options for suspicious activity are available, easily accessible across every product listing, and clearly labeled and conspicuous to consumers;
• Information about high-volume third-party sellers is clearly and conspicuously disclosed (full name, physical address, and contact information);
• A direct electronic messaging mechanism for consumers to contact high-volume third-party sellers is available, clearly visible, and easily accessible to consumers;
• All disclosures and reporting mechanisms are present and function consistently across all interfaces; and
• Appropriate recordkeeping practices are in place.