What just happened?
On September 5, 2025, the FTC dropped the hammer: Whaleco, Inc., better known as Temu, agreed to pay a $2 million civil penalty for violating the INFORM Consumers Act, making this the very first enforcement action under the law (FTC press release).
The INFORM Consumers Act, effective June 27, 2023, requires online marketplaces to:
- Provide clear and conspicuous seller identification—including the name, physical address, and contact info—for high-volume third-party sellers;
- Offer easy-to-use mechanisms (both electronic and telephonic) for consumers to report suspicious activity, including on gamified platforms and mobile listings.
Temu didn't check those boxes. They didn't offer telephonic reporting until January 15, 2024—nearly seven months late—and even then, consumers had to navigate menus and callbacks. On Temu's "gamified shopping experiences" (think spin-the-wheel games and coupon hunts), required info and reporting tools weren't in place until November 2024.
Why it matters—for real
The $2 million settlement is a clear signal that the FTC is taking INFORM Act enforcement seriously. The order requires Temu to:
- Pay within seven days of the court's order;
- Submit annual compliance reports for the next 10 years;
- Alert the FTC within 14 days of any structural changes affecting compliance;
- Allow FTC interviews and inspections to verify adherence.
Translation: this is not a quick fix—it's a decade-long compliance leash. And those "mystery gadgets" and "rainbow cat socks" people impulse-buy at 2 a.m. could wind up costing the platform a whole lot more than the $3.99 charged.
Back to our prior blog post
Back in August 2023, we wrote about the FTC's Guidance for Online Sellers on the INFORM Consumers Act. At the time, the guidance made clear that online marketplaces would need to quickly adapt to the law's requirements around seller disclosures and consumer reporting tools.
This Temu settlement shows that the FTC has moved from guidance to enforcement—and the price tag confirms that compliance gaps won't be overlooked.
Key takeaways
Details matter: Telephonic reporting buried in menus doesn't qualify. And gamified interfaces don't get a pass.
Delayed compliance is still noncompliance: waiting months to fix gaps simply compounds liability.
Ongoing oversight is expected: annual reporting and FTC access are baked into the order.
Clarity counts: disclosures must be obvious, uniform, and not hidden in app detours.
Final word (with a wink)
Temu's $2 million penalty is a pricey reminder that the INFORM Consumers Act isn't optional. For online marketplaces, ignoring compliance could make that mountain of silicone garlic peelers and inflatable garden gnomes look like a bargain.
This alert provides general coverage of its subject area. We provide it with the understanding that Frankfurt Kurnit Klein & Selz is not engaged herein in rendering legal advice, and shall not be liable for any damages resulting from any error, inaccuracy, or omission. Our attorneys practice law only in jurisdictions in which they are properly authorized to do so. We do not seek to represent clients in other jurisdictions.
