Fast fashion retailer Shein is facing a lawsuit alleging that its aggressive copyright infringement practices amount to racketeering under the Racketeer Influenced and Corrupt Organizations Act (RICO).
The lawsuit, filed by three fashion designers in the U.S. District Court for the Central District of California, claims that Shein has engaged in a long-standing pattern of racketeering to unlawfully profit from individual infringements.
By employing a complex corporate structure, Shein allegedly copies designs from various designers as part of its coordinated illegal operation, producing thousands of new items daily. This legal action is the latest in a series of challenges for Shein.
In May, lawmakers urged the Securities and Exchange Commission to halt Shein's initial public offering until the company verified that it did not exploit forced labor from the Uyghur population. The current lawsuit asserts that Shein has produced, distributed, and sold exact replicas of the designers' copyrighted work.
The designers seek unspecified damages and injunctions to prevent further racketeering activities. Shein has not yet responded to the allegations. Reports suggest that the company plans to raise funds for a potential U.S. listing this year.
Despite Shein's claims of transparency, a recent Congressional report criticized the company, along with another Chinese retailer, for their alleged use of forced labor in their supply chains.
