Online fast-fashion retailer SHEIN is ramping up its internal controls following a series of fines related to data privacy breaches, misleading discounts and greenwashing, according to a letter to investors, internal memos and sources with direct knowledge of the plan.
In a letter to investors reviewed by Reuters, SHEIN executive chairman Donald Tang said the company had established a “Business Integrity Group” to coordinate compliance, governance and external affairs teams and had expanded internal audit capabilities to strengthen operational discipline.
Over the past three months, SHEIN has faced mounting penalties: a US $ 174.5 million fine from France over website cookies collecting consumer data without consent, a US $ 46.6 million penalty from France’s antitrust agency for misleading discounts and a US $ 1.17 million fine from Italy over greenwashing.
According to the letter, the company has piloted enhanced internal controls in the United States, Canada, Brazil and Mexico. The company declined to comment on the letter’s contents but is currently hiring for two governance, risk and compliance policy analysts and one internal audit manager in Los Angeles. It is unclear if these are additional roles.
A source with direct knowledge of the matter said the internal overhaul focuses on areas where SHEIN faces legal risk, including breaches of copyright and product safety laws. Another source noted that as SHEIN’s global profile has grown, so have its risks, prompting senior management to allocate more resources to persistent compliance issues.
France has become the focal point of scrutiny of SHEIN’s practices. A recent investigation by a French agency of the OECD, prompted by a complaint from two French lawmakers, concluded that SHEIN does not comply with OECD guidelines on responsible business conduct, due diligence, workers’ rights, environmental standards and transparency.
The OECD’s final report, published on 29th September, stated that “information about the activity of the group, its finances and its governance remains extremely rare, hindering a clear analysis of its business, its revenue and its structure in the European Union and globally.”
A SHEIN spokesperson said the investigation “at times did not reflect the neutral mediation intended by the OECD framework” and rejected claims that the company was in breach of various EU legislation, “specifically those that are not yet applicable.”
