Shein Boosts Compliance After Fines Over Data and Greenwashing

Online fast-fashion retailer Shein is bolstering its compliance and governance systems after facing fines for data privacy violations, misleading discounts, and greenwashing, according to a letter to investors and internal documents reviewed by Reuters.

Donald Tang, Executive Chairman, said the company has created a Business Integrity Group combining compliance, governance, and external affairs functions, while expanding internal audit capacity to reinforce corporate discipline. Enhanced internal controls have been rolled out in the United States, Canada, Brazil, and Mexico.

The move follows recent regulatory actions. France fined Shein €150 million (MX$3.2 billion) for using website cookies that collected consumer data without consent and €40 million for misleading discounts. Italy imposed a €1 million penalty for greenwashing. Shein is contesting the French data privacy fine. Additional sanctions could arise from an ongoing EU investigation into product compliance with European safety standards.

Founded in China and headquartered in Singapore, Shein is pursuing a Hong Kong listing after previous failed attempts in New York and London. The company is hiring governance, risk, and compliance specialists in Los Angeles. A source familiar with the internal overhaul said Shein is prioritizing legal risk areas, including intellectual property and product safety, as its global presence grows.

In the investor letter dated Aug. 25, Tang cited “heightened challenges” in Q2, including US tariffs and “intensifying political and regulatory headwinds” in Europe. Despite slower growth in key markets, performance remained aligned with financial projections.

The end of duty-free treatment for low-value US orders has slowed Shein’s sales in its largest market, prompting price increases. Coresight Research forecasts US revenue growth of 20.1% in 2025, down from 50% the previous year, while European revenue is projected to rise 30.7%, surpassing the United States for the first time.

European regulators are increasing scrutiny of Shein’s business model. A French OECD report found that Shein does not fully comply with guidelines on responsible business conduct, labor practices, and transparency. The report noted that limited public information hinders independent assessment of the company’s EU operations. Shein responded that the investigation did not always reflect the neutral mediation expected under OECD standards and rejected claims of violating EU laws, particularly those not yet in effect.