Is Temu A Scam And Is China Spying On You? Here's The Truth

Temu is the second-most popular shopping app in the US behind Amazon because its prices are extremely low. From $5 shoes to a Nintendo Switch for only $7, these deals often seem too good to be true.

So is Temu a scam and is Temu safe? The truth is that most of us know very little about Temu’s origins.

Recently, Kim Kommando, a cybersecurity writer from USA Today, wrote a scathing review accusing Temu of collecting sensitive data from consumers and selling the info to China.

Then she went on to say, “Delete the app. The bargains are not worth it.”

As part of running my ecommerce store, I’ve been importing products from China for over 15 years. In this post, I will dissect everything you need to know about Temu, cut through the rumors, and get down to the hard facts.

Is Temu just a glorified Chinese spy app? And are the bargains too good to be true? Read on to find out!

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Table of Contents

What Is Temu?

Temu is a US-based online marketplace that offers extremely low prices on thousands of products shipped directly from China. The company is a subsidiary of PDD Holdings, a Chinese company which is publicly traded on the NASDAQ.

While Temu might seem to be an American company because it’s headquartered in Boston, Massachusetts, the reality is a bit more complicated.

The company that owns Temu, PDD Holdings, is registered in the Cayman Islands and has other companies under it in China. So even though it looks American, Temu is in fact a Chinese company.

The name Temu means “Team Up, Price Down,” which reflects the company’s philosophy of reducing prices for its most popular products.

Temu relies on economies of scale to maintain low prices across the board. The more people who use Temu to buy a specific product, the cheaper the price for everyone.

Overall, the reviews for Temu have not been good.

Temu has a 2.41 customer rating out of 5 on the Better Business Bureau, a 3.2 rating out of 5 on Trustpilot, and a 3.35-star rating on SiteJabber.

Is Temu A Scam?

scam

Temu is a legit business, and its parent firm, PDD Holdings, is listed as a publicly traded company on the Nasdaq. Temu is definitely not a scam but it has received hundreds of poor reviews with a 2.41 rating on the Better Business Bureau.

Purchasing from Temu is safe as the company provides a purchase protection program to safeguard buyers from fraudulent activities or damaged products.

The Temu Purchase Protection Program provides coverage for items that are not as described in the listing, items that arrive in damaged condition, and items that get lost during shipping.

Online reviews indicate that getting a refund from Temu can sometimes take a while, but refunds do in fact get issued.

Temu Reviews And Complaints

Temu has 1135 negative reviews on Trust Pilot and the majority of negative feedback pertains to subpar product quality, long shipping times, poor packaging, and unsatisfactory customer service.

As of this writing, 46% of the Temu reviews on Trust Pilot are negative, earning it a 3.2 out of 5 star customer rating.

Overall, the majority of Temu complaints are about:

Slow Delivery: This is due to extended delivery times, items being lost in transit, or difficulty tracking packages.
Poor Quality Goods: The quality of goods don’t match up to the expectations set by the product listings. This includes products made of cheaper material, or not functioning as described.
Poor Customer Service: Customers have reported difficulty in getting refunds or returns, or lack of communication from the company.
False Advertising: The images or descriptions of the products on the website do not accurately represent the actual items they receive.

Why Is Temu So Cheap?

Cheap

According to Temu, their prices are low because they leverage social shopping with team purchasing to negotiate lower prices for consumers. Temu also has access to a deep network of merchants, logistics partners, and an established ecosystem of suppliers.

Basically, they cut out the middleman, gather a bunch of orders of the same product from customers, and place large orders at low prices by leveraging economies of scale.

But experts believe that Temu is just a loss leader to gain market share for the app and to gather data for Temu’s real revenue source, information.

According to Juozas Kazuikenas of Marketpulse, “there’s absolutely no way Temu runs a profitable retail business. They are effectively buying market share and hoping in the years to come that market share will stick.”

So how does Temu plan to make money in the long run if their products are so cheap?

How Temu Makes Money

Temu generates revenue by gathering data and leveraging the information it amasses from U.S. consumers. This business strategy is mirrored by Pinduoduo, Temu’s sister company based in China, which follows the exact same business approach.

In 2022, most of Pinduoduo’s revenue came from online marketing services and not e-commerce. In fact, Pinduoduo mainly sells advertising services to its network of merchants.

Merchants can bid for keywords that match product listings and appear as ads on Pinduoduo’s platform. Pinduoduo also charges merchants a commission on each item sold through its platform. In addition, Pinduoduo generates revenue from transaction fees and merchandise sales.

Here is a breakdown of Pinduoduo’s revenue sources in 2022:

Online marketing services: 63%
Transaction fees: 26%
Merchandise sales: 11%

Merchandise sales were only 11%! In other words, Pinduoduo and its sister company Temu are really in the business of collecting data and profiting from it.

Why Is Temu So Popular?

The main reason Temu is so popular is because they are heavily subsidizing their merchandise to gain marketshare for their app.

Most Temu customers don’t pay much money at all for their products because Temu offers an incredible referral program that pays you cash for referring your friends to sign up.

The more installs of the app you refer, the more money you make.

Temu has also been investing heavily into the influencer marketing space. Personally, I’ve been offered $1000 to publish a video on YouTube about Temu. I’ve also been offered hundreds of dollars to post a short TikTok. (Note: I’ve never ever accepted their money)

Recently, I published a video about Temu and the video was inundated with positive comments about the platform.

There were literally hundreds of people gushing about the Temu shopping experience which made me suspicious. I’ve been creating content for a very long time and it’s rare to see so much enthusiasm about a shopping platform.

People are more likely to post comments when they are unhappy about a service, not when a service works as advertised.

As a result, I strongly believe that Temu has hired people to leave positive comments about their platform on all major social media outlets.

Temu is definitely spending a massive amount of money to promote their app.

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Is Temu Spying On You?

Spying

It is 100% true that the Temu app is gathering data about your phone usage habits including your name, address, and phone number as well as any details about you such as your birthday, photo, and social media profiles.

You’re also giving up information about your phone’s OS, your IP address, GPS location (with permission), and all browsing data.

Temu collects data from your sessions and search history and monitors your activity and time on site. If you log in using social media, it will also collect your public profile information, posts and other interactions on the platform.

In addition, if you’re using the app on a mobile device, Temu may collect data about your device itself, like your device ID, model and manufacturer, operating system version, mobile network information and even your mobile phone number.

However, the data that Temu gathers is similar to what many other apps and online platforms do, including some of the biggest tech companies in the world.

The privacy policies of Facebook, Google, Amazon and other tech giants also make it clear that they collect vast amounts of information about their users.

The real question is whether your data is being sent to China. As mentioned earlier, Kim Kommando on USA Today said flat out:

The prices are low because the goods are cheap.
What you see isn’t necessarily what you get.
Temu is a communist China based app and site.
Temu monitors your activity on other apps, tracks your notifications, locations, and can potentially change the settings on your phone.

Is Temu Stealing Your Data And Sending It To China?

There is no evidence that Temu is sending your data to China. However PDD Holdings, Temu’s parent company, does not have a good track record when it comes to online privacy.

According to CNN, the Pinduoduo app, Temu’s sister company, was caught with malware that exploited vulnerabilities in the Android operating system. Company insiders said the exploits were utilized to spy on users and competitors, allegedly to boost sales.

Mikko Hypponen, Chief Research Officer at WithSecure, was quoted as saying, “We haven’t seen a mainstream app like this trying to escalate their privileges to gain access to things that they’re not supposed to gain access to. This is highly unusual and it is pretty damning for Pinduoduo.”

These findings follow Google’s suspension of Pinduoduo from its Play Store in March of 2023, citing malware identified in various versions of the app.

An ensuing report from Bloomberg said a Russian cybersecurity firm had also identified potential malware in the app.

These vulnerabilities allow the app to gain full access to your contacts, calendars, photo albums, social media accounts, chats, and texts. In other words, almost everything on your phone.

CNN reports that “By collecting expansive data on user activities, the company was able to create a comprehensive portrait of users’ habits, interests and preferences, which allowed [Pinduoduo] to improve its machine learning model to offer more personalized push notifications and ads, attracting users to open the app and place orders.”

So does Temu steal sensitive data from your phone and send your data back to China? So far, there’s no evidence of it. But PDD Holdings has shown that they are capable of doing it.

Is Temu A Good Site To Buy From?

Having shopped on Temu, most of the products sold on the platform are cheap Chinese junk that isn’t branded. If you were to ever visit China, you’d see these types of cheap products being sold everywhere. They are not built to last.

Most of the sellers on Temu are not professional companies.

The merchants on Temu are what PDD Holdings calls “farmer merchants.” According to their SEC filing, “Small-scale farmers in China have traditionally relied heavily on layers of distributors to market and sell their products to the broader consumer base, which is highly inefficient. We believe our ‘team purchase’ model provides an alternative solution. The large demand helps farmers to directly sell to consumers without going through layers of distributors, thereby improving the overall supply chain efficiency and reducing cost.”

A farmer merchant is essentially like a mom and pop shop which is why quality varies so much on the Temu platform.

You get what you pay for. Don’t be dazzled by the low prices.

Should You Care About Being Spied On From China?

If you look at the bigger picture, selling off your data to China for cheap junk will have a negative long-term effect on commerce in the United States.

If you can afford to buy real, high-quality products from real merchants that are built to last, you should not use the Temu App.

While the verdict is still out whether your data is being sent to China, there’s a strong probability that this is happening on a large scale.

If you care about your data being collected or if you prefer to retain your privacy, then uninstall the app.

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Is Temu A Scam And Is China Spying On You? Here’s The Truth