Chinese fast-fashion titan Shein is facing serious legal headwinds in the European Union, with the European Commission launching investigations on three major fronts that could leave the company on the hook for substantial fines, back taxes, or worse.
From misleading sales tactics to customs evasion and noncompliance with tough new digital regulations, Shein now finds itself squarely in the EU’s crosshairs — and time is running out to make things right.
A Triple Threat of Legal Trouble
On May 26, the Commission formally accused Shein of violating EU consumer protection laws, citing “widespread infringements” that include pressure-selling, deceptive discounts, and potentially unlawful promotional strategies. These could fall foul of the Unfair Commercial Practices Directive, which allows for fines and other penalties.
Meanwhile, a second investigation has zeroed in on Shein’s customs and VAT practices. European watchdogs have flagged a flood of small parcels from China-based platforms like Shein and Temu, many of which appear to have been undervalued or misdeclared to dodge import taxes. Should authorities determine this was systemic, Shein could face retroactive tax bills or hefty customs fines.
The third front is arguably the most high-stakes: Digital Services Act (DSA) compliance. Earlier this year, Shein was officially designated a Very Large Online Platform (VLOP) — placing it under the bloc’s strictest rules on online content, transparency, and seller accountability. That came with a four-month deadline to comply or face fines of up to 6% of global revenue.
EU Authorities Turn Up the Heat
According to Belgian news agency Belga, national regulators are treating the consumer protection violations as “urgent.” If Shein doesn’t present a credible fix by July 3, enforcement measures could follow swiftly.
And the financial fallout could be significant. Customs officers are already ramping up inspections, and Shein’s inclusion under the DSA magnifies its regulatory exposure across the continent.
Faced with mounting pressure, Shein isn’t sitting idle. The company has reportedly assembled a heavyweight lobbying team in Brussels, enlisting the likes of former French Interior Minister Christophe Castaner, former Secretary of State Nicole Guedj, and ex-EU Commissioner Günther Oettinger, according to Le Monde. Their mission? To shield the brand from potential penalties and ensure its place in the EU market remains intact.
Expansion Amid Scrutiny
Despite the growing legal cloud, Shein continues to expand aggressively in Europe, opening pop-up stores in major cities and moving toward a much-anticipated initial public offering (IPO) — a step that could bring in billions in capital.
In a statement to Reuters, the company said it is “reviewing the Commission’s communication carefully” and remains “committed to complying with the laws and regulations in the markets where we operate.”
But with the July deadline looming and enforcement mechanisms ready to kick in, Shein may need more than promises and lobbyists to stay ahead of the EU’s regulatory dragnet. As scrutiny intensifies, the fashion giant’s European ambitions could face a dramatic makeover of their own.
