Shein is in the spotlight again for alleged unethical business practices. This time, it's not about workers' conditions or causing illness to its consumers. In the UK, it is under fire for fibbing about customs declarations, reported the Telegraph.

What's happening?

Shein's latest lawsuit is one from the high courts of the UK that claims the company avoided paying taxes on clothes imported to the UK. Specifically, the claim is that Shein "manipulated customs declarations for VAT evasion" for its flying parcels, according to the High Court documents analyzed by the Telegraph.

The claim was filed by a customs agent, IT Way Transgroup Clearance, in tandem with Orange Transgroup for parcels transited between 2021 and 2024. IT Way Transgroup Clearance claimed that it worked with Shein "under pressure and reputational risk," as Shein had "misrepresented parcel responsibility," per the Telegraph. It seeks £5.8 million (about $7.7 million) from Shein.

Shein has responded to the lawsuit. A spokesman said on Shein's behalf, "The allegations that have been made against Shein are completely unfounded. Shein complies with all relevant laws and regulations in each market it operates in and will defend and pursue its legitimate interests rigorously," per the Telegraph.

Why is Shein's tax evasion lawsuit important?

Shein is able to hide behind the de minimis rule as it ships low-value parcels to individual customers instead of shipping in bulk to warehouses. Under the de minimis rule, shipments worth less than £135 (about $181) are exempt from UK import duty, regardless of the fact that Shein earned $38 billion in profit from its sales worldwide, according to Reuters. 

Shein has pushed back against the claims by saying the de minimis tax exemption allows a lower price to be passed along to the customers and "lowers their unsold inventory," according to the high court documents.

Shein already has a worldwide reputation for its harmful environmental practices, workers' conditions, cheaply-made clothing with planned obsolescence, and prices that no ethical company can match. Its site launches 2,000 to 10,000 new items per day, and it produced 16.7 million tons of carbon in the year 2023 alone, according to SHEIN's Sustainability and Social Impact Report. 

What can be done about Shein evading import taxes?

Fashion brands are becoming more vocal about Shein's evasion, as the average brand has to ship to warehouses, not directly to consumers. The UK is also considering closing the de minimis loophole, similarly to the U.S.

Consumers can do their part by avoiding shopping with fast fashion brands altogether. You can make a difference — and save yourself a ton of cash —  by thrifting, and you can invest in higher-quality clothes that will last you for years instead of weeks.

Should companies be required to help recycle their own products? Definitely 👍 No way 👎 It depends on the product 🤔 They should get tax breaks instead 💰 Click your choice to see results and speak your mind.

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