In this National Law Journal article, Zach Lerner discusses the legal risks facing online retailers after Shein Global Holdings disclosed it faces potentially $80 million in fines tied to an ongoing FTC investigation, which reportedly centers on delivery delays and other customer service complaints.
Zach emphasized that retailers should make sure their shipping promises match reality and have a plan for communicating with consumers when fulfillment is interrupted.
“You need to consider your shipping promises and make sure they match reality,” Zach said. “Make sure they align with your inventory and fulfillment systems.”
Zach added that regulators often build their cases on a pile of consumer complaints, which companies should treat as a cue to take a closer look at their own practices.
“We often see regulators point to a mountain of complaints,” Zach said. “That mountain of complaints gets them [retailers] in trouble in the first place.” Those complaints are a warning, he said. “You need to investigate. Take a step back and assess what’s going on.”
Zach also stressed the importance of acting quickly if the FTC comes calling, noting that the first sign of an investigation is often a civil investigative demand.
“Contact counsel as soon as possible. We often see that clients sit on CIDs or other demands,” he said.
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