Why did the Commerce Minister warn Kiwis about Temu?

Saturday, 22 February 2025

Commerce Minister Andrew Bayly took the unusual step of warning people to be careful when shopping on Chinese bargain shopping platform Temu.

“Just a word of warning, don't go on Temu, or be very careful if you go on the marketplace on Temu because that's where you're going to get scammed most likely,” Bayly told the audience at a financial services conference earlier this month.

“Be careful,” he warned.

It’s not common for a minister to issue a warning about a specific company, even in a relatively informal way as Bayly did during a question and answer session after giving a speech on financial markets reform at the Financial Services Council’s Outlook 2025 event in Auckland.

But Temu is not an ordinary company.

Governments and regulators around the world appear to have it in their sights, including in Australia, where an investigation is ongoing into whether Temu is doing enough to stop the sale of dangerous goods. It came after an 8-year-old girl was burned when sparks ignited a glow-in-the-dark jumper bought on the e-commerce platform.

Jessica Walker, acting head of research and advocacy at Consumer NZ, said Temu was one of the most common subjects raised by the public with Consumer’s researchers, and one of its investigative writers was digging into the ecommerce company.

“New Zealanders are very interested in Temu,” she said.

One of the accusations made about Temu was the “gamification” of e-commerce on the site with rewards, discounts and games part of its sales techniques.

“Once you are on that train, it is hard to get off,” she said.

Walker said there were also concerns about the information Temu was harvesting from users, and what it was doing with it.

Research paid for by charity Tearfund, which rated Temu a ‘zero’ on social responsibility in its 2024 report into the “dark side” of fast fashion, indicated as many as one in four New Zealanders have bought from Temu.

“As our cost-of-living crisis continues, we’ve seen cheap online retailers like Temu and Shein rising in popularity,” Tearfund said last year. “When we’re feeling the pressure financially, it seems logical to pick a $5 T-shirt over the $50 one. But many of us are questioning how a T-shirt can possibly be so cheap in the first place.”

The latest New Zealand Post ecommerce data shows that department, variety and miscellaneous retail stores ‒ the largest online spending sector ‒ saw a 5% increase in spending in the last three months of 2024, driven by a 23% increase in spending with offshore retailers like Temu, Shein and AliExpress.

Social media posts, and multiple media stories, indicate consumers are sometimes disappointed with products they buy from businesses selling through Temu.

But in terms of being scammed on Temu, there does not appear to be a flood of complaints despite the platform’s massive usage by New Zealanders.

The Commerce Commission said it had received 26 enquiries about Temu in the past 12 months, but was not currently investigating the complaints.

Bayly warned people to take care when using credit and debit cards to buy through Temu.

Some online safety experts recommend people do not link any of their accounts to the Temu app, but instead make one-off secure payments buying through Temu’s official website, and not allowing Temu to save their payment details.

“Doing this will keep you safe if Temu has a data breach because cybercriminals would not be able to access your private information,” according to US security services provider Keeper.

The Post has seen one instance of a New Zealand Temu user who was sent multiple parcels paid for by charges on their credit card, despite not having ordered them.

However, after an initially slow response to her concerns, Temu reversed the payments when the products were returned.

Vanessa Horne, the commission’s competition, fair trading, and credit general manager, said: “The commission has not been made aware of allegations related to credit card charges being made without consumers’ knowledge or consent.”

But, she said: “Online retail platforms and illegal conduct are an ongoing priority area for the Commerce Commission. We welcome any further information with regards to this matter and so if people think a business has breached one of the laws we enforce please let us know using the ‘report a concern’ on our website.'

A spokesperson for ANZ said the bank had not seen issues like unauthorised payments made after people had used Temu with credit, or debit cards.

But it had started issuing credit cards with dynamic CVC numbers. The CVC numbers change every few hours, making the cards more secure against unauthorised payments.

Brent Carey, chief executive of Netsafe, an independent, non-profit online safety organisation committed to helping people stay safe online, said there were phishing scams and fake Temu website scams reported, but no concerns about people using Temu having unauthorised payments taken.

When approached by The Post about his Temu comments, Bayly said: “There’s an element of risk involved with using your credit or debit card in any online setting.

“With scams becoming more sophisticated by the day, I’m urging everyone to exercise caution online, wherever their favourite shopping platform may be.”

For the US, it’s a case study in Chinese trade restrictions designed to build China’s exports and local commerce.

Low-value parcel deliveries to the US from China were disrupted earlier this month when President Donald Trump removed the “de minimis” exemption on tariffs, fees and taxes on lower-value shipments to the US, but had to reverse it when chaos ensured as parcels piled up at ports.

The European Union is also considering phasing out its own de minimis tax breaks for imported goods

The de minimis rules have been used by Chinese e-commerce giants like Alibaba and Temu to grow their business in the US.

The Congressional Research Service earlier this month released data showing China had expanded its global e-commerce exports by more than tenfold over the past five years, much of it to the US.

In 2023, there were roughly one billion de minimis parcels imported into the US by consumers, and China was responsible for about a third of them, worth US$18.4 billion.

The Congressional Research Service said China restricted ecommerce from outside its borders.

“US de minimis policies have allowed PRC-tied ecommerce firms to expand in the US market while PRC policies restrict US counterparts in China,” it said.

The European Union has also opened formal proceedings against Temu billed as a crackdown to stop unsafe goods being sold to Europeans.

It is also investigating whether Temu’s “game-like rewards programmes” are addictive with “negative consequences to a person’s physical and mental wellbeing”.