Shein faces federal review as company prepares for planned stock market listing.
Fast-fashion company Shein has revealed that it is facing an investigation from the Federal Trade Commission (FTC) as the company prepares for its possible public stock offering in the near future. The company disclosed the federal review in documents connected to its planned listing on the Hong Kong stock exchange, warning that the outcome could lead to large financial costs. Shein said the FTC is reviewing parts of its U.S. business operations and that the company is cooperating with the federal agency. The company stated that the investigation could end with a settlement, but officials do not know how long the review will take or what the final result will be.
The FTC is a federal agency responsible for protecting consumers by investigating unfair business practices, misleading claims, and other actions that may harm customers. The agency confirmed that an investigation involving Shein exists but did not provide additional details about what areas are being examined. The company has grown quickly in recent years by selling inexpensive clothing and accessories to customers around the world. Shein became especially popular among younger shoppers because of its large selection of trendy items offered at low prices. The company has expanded internationally, with its headquarters now located in Singapore after originally being founded in China.
The planned Hong Kong initial public offering comes after earlier efforts to enter the public market faced difficulties. Shein previously considered a stock listing in the U.S. but encountered concerns from lawmakers and others regarding its business practices. The company has faced questions about its supply chain, specifically, including concerns raised by U.S. lawmakers about whether some materials used in its clothing could be connected to underhanded business practices like forced labor. In 2023, several senators questioned the company about cotton linked to the Xinjiang region of China. Shein has repeatedly denied using forced labor and has said its supply chain follows required standards.
Additional concerns were raised in 2025 when U.S. lawmakers questioned the company after reports that third-party sellers on its website had listed childlike sex dolls. Shein later stated that the products were removed and that the company banned all sex dolls from its marketplace. Shein has also faced scrutiny outside the United States. In Italy, regulators began reviewing the company’s environmental statements in 2024 over concerns that some sustainability claims made by the company at the time could be misleading to its consumers. Shein said it would cooperate with that investigation.
The company’s financial performance has also changed as it moves toward a possible public offering. Shein reported a loss of $99 million during the first quarter of 2026, compared with a profit of $395 million during the same period the previous year. The company said part of the decline was related to changes involving low-value shipments entering the United States. Shein has warned investors that the FTC investigation could affect its financial condition, largely depending on how the matter is resolved. The company said possible payments connected to the investigation could have a major impact on future results.
The FTC investigation adds another challenge for a company that has experienced rapid growth while facing questions about its business model. As Shein moves closer to becoming a publicly traded company, investors will be intently watching how the FTC review develops and whether additional concerns affect the company’s plans.
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Federal government is investigating Chinese fast-fashion giant Shein
Shein says it’s under investigation by the Federal Trade Commission as it prepares for Hong Kong IPO
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