The fast fashion brand is facing a lawsuit alleging it violates the Mafioso Influenced and Corrupt Organizations Act.
China’s fast-fashion retailer Shein is facing a lawsuit that claims the clothing maker’s copyright infringement is so aggressive it amounts to extortion.
This week’s filing claims that Shein is violating the RICO, a law originally designed to prosecute organized crime.
“Shein has grown rich by committing individual offenses over and over again, as part of a long and continuous pattern of organized crime, which shows no signs of abating,” the filing reads.
In an organized effort to create up to 6,000 new items a day, Shein uses a “Byzantine game of corporate structure” to rip off designers, a coordinated illegal operation best combated through the use of RICO statutes, according to the lawsuit.
The lawsuit is just the latest in a series of difficulties Shein has faced. In May, a bipartisan group of two dozen lawmakers asked the Securities and Exchange Commission to halt an initial public offering by Shein until it verified that he does not use forced labor from the country’s predominantly Muslim Uyghur population.
The lawsuit, filed by three fashion designers in the US District Court for the Central District of California, alleges that “Shein produced, distributed, and sold exact copies of their creative work.”
“What is at stake here, inexplicably, are truly exact copies of the copyrighted graphic design that appears on Shein products,” the civil lawsuit states.
The designers are seeking unspecified damages and want an injunction to prevent further organized crime activity.
“Shein takes all claims of infringement seriously, and we take swift action when complaints are filed by valid intellectual property rights holders,” Shein said in a prepared statement on Friday. “We will vigorously defend ourselves against this lawsuit and any claim without merit.”
Shein has not said whether it plans to go public this year, but there are reports that the company is raising money in anticipation of a US listing before the end of the year.
Shein spokesman Peter Pernot-Day has said that the company takes transparency throughout its supply chain very seriously.
But a congressional report last month unleashed fierce criticism of Shein and another Chinese fashion retailer, Temu.
The report is part of an ongoing congressional investigation into products offered to American consumers that could be made with forced labor in China. As part of the investigation, the committee sent letters in early May to brands Nike and Adidas, as well as Shein and Temu requesting information on their compliance with the law against forced labor.
Shein said at the time that the “company’s policy is to comply with the customs and import laws of the countries in which we operate.” He also said that he has “zero tolerance” for forced labor and has put in place a robust system to ensure compliance with US law.
