Olivia Farrelly signed up for Temu - and quickly deleted the app a few days later. Photo / supplied
A new Chinese-owned shopping platform has quickly become one of the world’s most popular apps, offering incredibly cheap goods. It also rewards you if you get friends to sign up. Is Temu all it’s cracked up to be?
Liv Farrelly was scrolling through her TikTok feed when a friend’s video popped up – she was excitedly showing off $350 in her Pay Pal account, the rewards from encouraging other mates to sign up for the hot new shopping app Temu.
“I was like, what the hell is this? It looked like one of those pyramid schemes. Then she showed a screenshot of her Pay Pal with all the money. I’m like, this looks legit.”
The young Aucklander – using a code from her friend – downloaded and logged into Temu, the Chinese-owned shopping app, which has fast become one of the most popular apps in the US, and launched in New Zealand and Australia in March.
It offers amazing deals and free shipping from 97c packets of socks and $1 iPhone chargers to $15 T-shirts and $30 smartwatches. The website offers a smorgasbord of thousands of everyday and weird items.
The opening screens did not give Farrelly confidence. Its user face looked like one of those annoying pop-up ads, a visual explosion with spinning wheels, and promises of free money and cheap goods.
“You have to play a game. It’s like, ‘you’ve won $100 off’, ‘you have six free items’… it sounds too good to be true.”
As she spun a wheel, Farrelly started collecting tokens. Reaching 150 tokens unlocks Pay Pal money. “The app gives you about 80 or 90 tokens just by playing the game, having the wheel spin… and then you have to invite people [to earn more tokens].”
By last Friday she was getting messages from Temu that she needed to invite only one more person, and she’d have enough tokens to earn money. She sat with four friends in the pub. They all signed up. Liv says she was still getting messages saying she needed only one more person.
Her friends questioned its legitimacy.
Farrelly has since deleted the app, worried about the data she’s relinquished. She says she is still getting text messages from Temu.
When she signed up, she used her Facebook data, including her birthdate and mobile phone number.
A few days later third-party scammers texted her and her other friends one of those annoying and obviously false messages that they owed hundreds of dollars in road toll fines. Farrelly believes there could be a link.
She has a warning for people enthralled by the app, especially those lured by the dollars of signing others up. “Pay Pal money is great, but your data is so valuable.”
“Use it at your own risk and think about the larger picture. There’s no such thing as money for free. Long term how’s this going to affect me? Will my data be sold, will my Pay Pal get hacked? Will my Facebook get hacked? Just be cautious. And don’t believe everything you see on social media about it.
“It’s the biggest thing in the world right now. Everyone’s talking about it.”
Temu is owned by China’s PDD Holdings which also owns Pinduoduo, another massive online shopping platform in China. Temu competes against other online shopping giants including Alibaba and Amazon - and, of course, the bricks and mortar New Zealand retail stores. It launched in the United States nine months ago, and came to New Zealand and Australia in March.
The Washington Post reported this month that Temu had removed from its website references to its Chinese ownership and US news outlet Semafor reported this week that PDD Holdings had moved its official headquarters from Shanghai to Europe.
It comes amid widespread wariness of Chinese-owned and operated apps. TikTok - owned by Beijing-based ByteDance - has been banned from use on parliamentary workers’ phones in New Zealand, the US, UK and several other countries, over fears about the use and security of data. Among the worries is the possibility the Chinese government could access data to manipulate the app’s algorithm to promote pro-China content.
In the US, where Temu soared to the number 1 most downloaded app within four months - outstripping TikTok, YouTube and Instagram - there have also been concerns about many of the shopping goods not being delivered in time, or at all. Temu offers a $5 standard shipping credit for late delivery in New Zealand.
Time reported in December Temu had already been subject to more than 30 complaints to the Better Business Bureau in the US and had a customer rating at that time of less than 1.5 stars.
But through its friend-get-friend sign-up schemes, using a range of influencers for paid partnerships and an extensive advertising budget (Temu broadcast an ad during Super Bowl), the app continues to sign up thousands of new users a day, attracted by the low costs driven by the direct manufacturer-to-customer model. More than 50 million Americans have signed up in the first nine months.
New Zealand’s Netsafe says it is keeping a “watching brief” on Temu.
“So far, no complaints made to us about the app. There have been a number of inquiries about the legitimacy of the offers and the business model, but as precautionary questions,” Netsafe chief online safety officer Sean Lyons said.
“From what we see from other organisations in the same territories as Temu, the complaints made have generally been about slow delivery and poor customer service. These are similar to the kinds of complaints raised about other e-commerce platforms like Wish, AliExpress, Shein and even at times Amazon.”
Speaking generally, Lyons said Liv Farrelly’s cautionary messages were “absolutely right”.
“Caution when signing up with a new service such as this is a good habit to get into. Working out as much as you can about who is behind the service you are engaging in, and where they are based is an important part of the due diligence we should be doing.”
It was also important to question whether the company had accessible customer service contact details; where it was based; and data protection laws in that country of origin. And, “do I really need to provide the information they are asking for in order to trade with me?”.
According to US TV tech host, Kim Komando, Temu collects:
Komando claims “they also gather more about you from third-party sources, including Temu sellers, public records, social media, data brokers, credit bureaus, and marketing partners”.
There are also concerns that many goods being sold may be the result of cheap labour.
As The Spinoff has reported, Temu’s website lists the company values: “empowerment”, “inclusion and diversity”, “integrity” and “socially responsible”.
“However, there’s no evidence or examples of how it exercises these principles,” The Spinoff’s Shanti Mathias wrote. “The company has limited transparency: the vendor selling an item is named, but the website doesn’t show where that vendor is based and who is making the products. That said, Temu’s parent company Pinduoduo has been accused of an overworked “996″ (9am to 9pm, six days a week) culture, especially after an employee collapsed from exhaustion, and another died jumping off a building after asking for leave in 2021.”
Lyons said he could certainly understand Liv Farrelly’s concerns. “The friend-get-friend scheme, offering free money for convincing others to use the app, does have a ‘too good to be true’ feel about it. But these are marketing models for the acquisition of new customers that are widely practised, and are no different in their mechanism than schemes offered by Uber, AirBnB and other brands that we potentially have a higher trust in.”
Lyons said a game-like interface might be more reminiscent of a scam than a trading platform.
“However, most successful scams don’t look like scams any more, most scams don’t work on a ‘too good to be true’ model, they achieve more success with a small gain, with low risk, in a short amount of time model. The caution is good to see, but we need to ensure we apply that caution broadly, not just to the places that are new.”
Freedom has 13 stores in New Zealand.