France’s antitrust authority has fined fast-fashion retailer Shein 40 million euros (US$47.2 million) for alleged deceptive business practices, including misleading discount promotions.

The penalty follows a nearly year-long investigation into the company’s pricing practices.

The investigation, conducted between October 1, 2022, and August 31, 2023, found that 57% of advertised discounts on Shein’s French website did not reflect lower prices.

Additionally, 19% of discounts were smaller than advertised. Furthermore, 11% involved price increases.

The agency reported that Shein failed to comply with French regulations, which require discounts to reference the lowest price offered in the preceding 30 days.

The company had also been found to raise prices before applying discounts.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Deceptive pricing tactics have a long history in fast fashion

Shein’s €40 million fine in France follows a pattern of pricing controversies in the fast fashion industry that extends back years.

In 2016, Zara faced a $5 million class-action lawsuit in the United States for alleged “bait-and-switch” pricing tactics, where items displayed with Euro prices resulted in significantly higher dollar charges at checkout1.

The lawsuit claimed consumers were paying $5 to $50 more per item than the converted Euro price would suggest, with documented examples showing markups as high as 60% over expected prices based on exchange rates2.

The Shein case differs in mechanism but shares similarities: the French investigation found 57% of advertised deals weren’t actually offering lower prices, while 19% had smaller discounts than advertised, and 11% were actually price increases3.

These cases highlight how fast fashion brands across different markets have faced legal challenges over pricing transparency, suggesting industry-wide practices that regulators are increasingly scrutinizing.

2️⃣ Artificial discounting is a widespread retail psychology tactic

The Shein case exposes a broader industry practice where retailers artificially manipulate reference prices to create an illusion of savings.

Recent Shein developments