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What you need to know about the SHEIN lawsuits

The ultra fast fashion retailer’s copyright usage, labour practices, and competitive behaviour have come under fire in recent months, threatening to hinder its plans for a takeover of the US market.

The linchpin of inexpensive, mass-produced goods with prices even eye-wateringly lower than PrettyLittleThing on Black Friday, SHEIN’s ubiquity – most notably on social media – has catapulted the Chinese conglomerate to cult status among trend-enthusiasts across the globe.

Giving ASOS a run for its money, it has contrived to conquer the world so rapidly that most of us didn’t even notice.

Now the biggest company of its kind (reported to have generated $100 billion in sales in 2022) SHEIN has completely redefined the fast fashion model right from under our noses.

However, while it remains popular due to its affordability and quick jump on fads, the retail giant has come under increasing fire in recent years for its copyright usage, labour practices, and competitive behaviour.

Branding on a bag at the Shein Group Ltd. headquarters in Singapore, on June 19, 2023. (Ore Huiying—Bloomberg/Getty Images)

It has also received substantial criticism for its poor environmental standards, generating around 6.3 million tons of carbon dioxide annually, and made headlines last month for inviting influencers on a trip to its warehouses, which raised questions about disguised consumer manipulation.

At present, it’s being sued by plaintiffs for these reasons, the most damning of them all being its repeated infringements that are so aggressive, they’re said to amount to racketeering.

The filing, which reads that ‘it is not an exaggeration to suggest that SHEIN’s pattern of misconduct involves commission of new copyright and trademark infringements every day,’ claims that SHEIN is in violation of the Racketeer Influenced and Corrupt Organisations Act (RICO).

According to the lawsuit, in an organised effort to create as many as 6,000 new items per day, SHEIN uses a ‘byzantine shell game of a corporate structure’ to rip off designers, a coordinated illegal operation that can best be combatted ‘through the use of RICO statutes.’

A requirement to file a RICO claim is that the offending party is not just an individual or business but a criminal organisation, as the suit claims Shein’s alleged infringement activity is ‘committed not by a single entity, but by a de-facto association of entities.’

Artists Krista Perry, Larissa Blintz, and Jay Baron are accusing the company of intentionally selling copies of their intellectual property, including their prints and designs.

They are seeking unspecified damages and want injunctive relief to prevent further racketeering activity.

Alleging that SHEIN ‘knowingly committed criminal copyright infringement, and played its role with full knowledge of the overarching criminal copyright infringement it participates in,’ Perry, Blintz, and Baron believe it did so with a ‘secretive algorithm’ to identify trending art it could then replicate.

‘The brand has made billions by creating a secretive algorithm that astonishingly determines nascent fashion trends – and by coupling it with a corporate structure, including production and fulfilment schemes, that are perfectly executed to grease the wheels of the algorithm, including its unsavoury and illegal aspects,’ they argue in the lawsuit.

‘SHEIN’s confusing corporate structure allows the company to avoid liability in the case of intellectual property infringement. The brand’s first line of defence when facing a copyright or trademark cease and desist is removing the product from its sites with blaming the misconduct on another actor.’ This, they say, will not happen again.

It’s a sentiment echoed by Sucharita Kodali (principal analyst at advisory firm Forrester) who deems this undeniably strong convergence of often-disparate issues – environment, human rights, intellectual property, data privacy, trade policy and US-China relations – a ‘perfect storm’ that could see SHEIN shut down and liquidated within the next year.

‘I’d say there’s a 50-50 chance SHEIN is forced into more disclosure and higher costs,’ she tells Vogue Business. ‘If that happens, the company will slowly die on the vine. No one wants expensive, poor-quality merchandise.’