The low-cost online marketplace Temu has been accused of unfair business practices as part of an official complaint issued by Swiss international companies and domestic retailers. They argue that the company uses fake discounts and illusions of scarcity in order to sell its products.

Swiss retailers file complaint against Temu

In a statement, the Swiss Retail Federation confirmed that it had filed an official complaint with the State Secretariat for Economic Affairs (Seco) regarding Temu - a Chinese-owned online marketplace offering clothing, technology and accessories for extremely low prices. First launched in 2021, customers across Swiss cities and cantons have been able to take to the internet and use the Temu app and website since 2023.

Speaking to the AWP, federation director Dagmar Jenni accused Temu of unfair business practices. "There is considerable suspicion of illegal advertising with percentage discounts and crossed-out prices, as well as repeated advertising with offers below cost prices and misleading information about the availability of the offers," she explained.

She added that a Temu feature claiming that a product is a certain percentage cheaper on their website compared to Swiss supermarkets and other providers is against the law, as it can be only used if the company actively seeks out and compares their prices with the national average. Considering the sheer number of products on the Temu store that sport the feature, the federation argued it is “impossible” for the company to make the claims it does.

Temu gives a fake illusion of scarcity, Swiss federation argues

Alongside claims of fake strike-through pricing - where companies increase the price of a product ahead of a sale before “discounting” it back to its original price - Jenni also accused Temu of giving customers a fake illusion of scarcity. She claimed that brand-new products that appear in the store often come with alerts informing customers that only a limited number are in stock, which convinces users to buy quickly.

Jenni argued that there is “a general public interest, both on the part of consumers and competitors in Switzerland, that Seco quickly investigates, in the same way as the authorities abroad, whether Temu complies with the rules of fair competition.” She concluded by confirming that several other Swiss trade federations have added their weight to the complaint.

Latest in several complaints against Temu

The latest complaint follows several criticisms of Temu and its business model. Alongside quality and fast fashion-related complaints, in June 2023 a select committee report from the United States Congress said that there is an “extremely high risk” that Temu’s supply chains could involve forced Uyghur labour in the Xinjiang province of China. A Business Insider piece from November 2023 also claimed that Temu workers operate on "996" working hours - an illegal practice used mainly in China where staff are expected to work from 9am to 9pm, six days a week.

In response to the former accusation, a spokesperson for Temu told the BBC that it was not responsible for third-party sellers that use its platform. The company is yet to respond to the complaint filed by Swiss retailers.

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