Temu’s parent company faces class action lawsuit over spam calls

Temu and its holding company Whaleco have another case in the growing mountain of lawsuits against them. This is a new class action lawsuit alleging that Whaleco harassed and annoyed consumers with spam sales calls and texts that redirected them to Temu’s website despite being on the national block list. It’s the third class action lawsuit filed against the company in the last year, and the latest example of how consumers and regulators alike are growing increasingly suspicious of the e-commerce giant despite its claims that its operations are legally sound.

In the newly filed lawsuit, filed on July 3 in the U.S. District Court for the District of Massachusetts, plaintiff Phyllis King accuses Whaleco of violating the Telephone Consumer Protection Act (“TCPA”), which prohibits companies from telemarketing to people who have registered on the national “Do Not Call” list. King’s lawsuit emphasizes that “Do Not Call” registrations must remain valid indefinitely unless canceled by an individual or removed by the database administrator. Since that did not happen in her case, King claims that Whaleco’s “annoying and harassing calls” should be punished under the TCPA, which can result in penalties of $500 per violation, with willful violations up to $1,500 per violation.

According to the complaint, King received four telemarketing text messages from Whaleco in April 2024, promoting offers and directing her to Temu’s website. King claims that her number has been listed in the national Robinson directory since 2022 and that she never gave Whaleco her consent to receive such messages. Nevertheless, Whaleco sent the text messages, she claims.

The class action aspect matters, King claims, because the number of people who may have experienced the same thing she did is likely in the “hundreds” due to the “massive nature of telemarketing calls and text messages.” King and all members of the proposed class action were harmed by Whaleco’s actions, the suit says, not only by the “multiple involuntary phone and electricity charges” but also by the “invasion of their privacy, the annoyance, harassment, wasting of time, the interference with their phone preventing them from receiving legitimate messages,” not to mention the violation of their legal rights.

In addition to the certification of her proposed class action, King is seeking a jury trial and damages. She states that “all members of the class” were harmed by (Whaleco’s) actions “because their privacy was violated and they were subjected to unlawful calls that “constitute harassment.” She is asking the court for an order prohibiting Temu’s owner from making telemarketing calls and text messages to numbers on the national block list except in emergency situations. She is also seeking damages as permitted by law and reimbursement of attorneys’ fees and other costs. Other remedies include:

> TCPA Breakdown: The TCPA was passed by the U.S. Congress in 1991 (along with the national Robinson List) with the goal of curbing the rapid expansion of the telemarketing industry and the invasion of privacy that comes with it. Violations of the TCPA, including in the form of phone calls and text messages, have resulted in high costs for companies that have violated it in the past.

For example, in December 2020, DISH Network was found liable for over 65 million violations of the TCPA, resulting in an initial penalty of $280 million. In another major case from 2014, Sprint was fined $7.5 million by the Federal Communications Commission for repeated violations of the Do-Not-Call rules, despite previous settlements for similar violations. In addition, last year the Federal Communications Commission imposed a record $300 million fine on a network of companies involved in an auto warranty robocall scheme that made over 5 billion calls to numbers on the Do-Not-Call registry.

THE BIGGER PICTURE: Aside from the TCPA, the latest lawsuit shows a growing distrust of Temu and its parent company, from both consumers and regulators. Most recently, on the regulators’ side, the state of Arkansas filed a lawsuit against Temu earlier this month, denouncing the company’s alleged failure to protect customer data. In addition, a U.S. Congressional panel launched an investigation into Temu’s data security practices and potential national security threats, while the U.S.-China Economic and Security Review Commission echoed these concerns and urged vigilance and new policies to address such issues.

As for consumer trust, the lawsuit follows two other class action lawsuits filed by consumers in late 2023 in the U.S. District Court for the Northern District of Illinois and the U.S. District Court for the Eastern District of New York. These lawsuits make similar claims to the Arkansas case and accuse Temu of failing to protect customer data by tracking user activity on third-party websites and embedding malware in its app while misleading consumers about data access.

Meanwhile, a recent survey by marketing software company Omnisend found that 86 percent of U.S. consumers surveyed trust Amazon, compared to just 6 percent who trust Temu, even though 68 percent of U.S. respondents said they shop at Temu. Poor product quality and too much advertising were among consumers’ top complaints about Temu, according to the survey. Despite the low trust levels, the survey found that consumers are primarily attracted to Temu because of its prices (53 percent), ease of use (31 percent), and deals and discounts (29 percent).

The case is Phyllis King v. Whaleco Inc., 1:24-cv-11720 (D. Mass.).