Temu settles Texas data privacy lawsuit with U.S. server limits, $3 million payment

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Temu Texas privacy settlement

Highlights

Temu settles with Texas by agreeing to store personal data on U.S. servers, limit data transfers to China, and pay a $3 million penalty.
Failure to comply with Texas data security provisions could result in an $8 million penalty per year of violation under the settlement terms.
The agreement mandates annual independent product safety testing, removal and refund of hazardous goods, and third-party cybersecurity audits of Temu's app for malware and spyware.

Settlement terms cover data handling and compliance

As reported by Reuters, documents made public Friday show Temu agrees to settle Texas' claims by keeping personal data from shoppers in the state on U.S. servers and limiting when information can be sent to China.

Texas officials say this is the first resolution among several state lawsuits accusing Temu of unlawfully harvesting U.S. user data that could be accessed by the Chinese government. Under the settlement, Temu agrees to send to China only the data needed to complete a transaction, such as shipping addresses, while denying wrongdoing in the case documents.

Temu will pay $3 million to Texas as part of the agreement. The state also says any failure to comply with various data security provisions could trigger a potential $8 million penalty for each year a violation occurs.

Product safety duties widen operational oversight

Beyond privacy restrictions, the agreement requires Temu to conduct annual independent product safety testing to identify goods containing dangerous chemicals or materials. If hazardous products are found, the company must remove them, terminate the seller and affiliated stores, notify affected Texas consumers and provide full refunds.

Texas Attorney General Ken Paxton says the settlement also requires rigorous new product audits and safety standards, including for clothing and children's items. The deal further requires Temu to hire a third-party cybersecurity auditor to examine the app's code for malware and spyware, concerns that helped prompt Texas to sue in February.

Temu had more than 82.4 million active users in the United States as of September 2023, according to Paxton's office. The settlement could set an early benchmark for how U.S. states pursue oversight of cross-border e-commerce platforms facing scrutiny over data access and app security.

In our earlier coverage of Kmart’s Federal Court case with the ACCC, we detailed allegations that the retailer breached Australian consumer product safety rules across multiple items, including nail glue sold without adequate burn warnings. The proceedings also involve claims around non-compliant button-battery watches and smart tags, with regulators pointing to reporting failures and injury risks—underscoring how quickly product-safety compliance can escalate into legal action.

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