Shein: The Perpetual Sale That Was Never Real

EvilCorporations.com • Case 3:26-cv-04062, N.D. Cal. • Estimated Reading Time: 6.9 minutes

The Non-Financial Ledger

There is a specific kind of humiliation that comes with realizing you were tricked by something that looked like a gift. Shein built its entire brand on that feeling. It targeted women on tight budgets who wanted to feel good about themselves, who wanted one nice dress, one gym set, one outfit that fit. It told them: you are lucky, you caught a sale. The price is crossed out. Look how much you saved.

Plaintiff Stacee Severino, from Del Norte County, California, one of the poorer counties in the state, bought a floral dress, a leopard print outfit, a vintage-style lace dress, a tie-dye t-shirt, denim jeans, and a boho summer dress from Shein. She kept buying because Shein kept telling her she was getting a deal. She was not getting a deal. The price she paid was the real price. The higher price in strikethrough text was fiction, posted for no reason except to make her feel like she was winning when she was not.

Plaintiff Gayle Brownlee in Berkeley spent $7.69 on a Mulvari bodysuit that Microsoft Shopping’s price tracker shows had a typical market price of $7.25. The “regular” price shown to her was $11.69. The “savings” she thought she was getting did not exist. Plaintiff Pooja Prakash in Sacramento bought pajamas advertised at a discount. She bought dresses she believed were on temporary sale. All of it was theater.

The complaint documents that the scheme ran continuously from at least 2022 through the date of filing in May 2026. For years, millions of shoppers, disproportionately women, disproportionately people who chose Shein because it presented itself as affordable, were systematically lied to about the value of what they were buying. They were not simply overpaying by a few cents. They were paying prices that had been psychologically inflated by a fake reference point designed by a company that earned $1.1 billion in net profit in 2024 and was projected to double that in 2025. The shoppers did not know. The company did.

Legal Receipts: What the Documents Actually Say

The following are verbatim passages from the filed complaint and from the federal regulations cited within it. They establish the legal and factual core of what Shein is alleged to have done.

“On information and belief, all or nearly all the reference prices on the Website are false and misleading. They are not bona fide former or regular prices at which the Products were offered by Shein in the recent past for a substantial time. And they are not prevailing market prices. Rather, they are inflated prices posted to lure consumers into purchasing Products from Shein that typically are discounted.”

— Severino et al. v. Shein US Services, LLC et al., Complaint ¶7

• This passage establishes the plaintiffs’ core theory: the reference prices are not accidental errors or rounding issues. They are described as deliberately inflated prices with no foundation in any actual prior sale.
• The complaint alleges this applies to “all or nearly all” products, meaning the deception was structural and platform-wide, not limited to a handful of items.

“If the former price is set forth in the advertisement, whether accompanied or not by descriptive terminology such as ‘Regularly,’ ‘Usually,’ ‘Formerly,’ etc., the advertiser should make certain that the former price is not a fictitious one.”

— 16 C.F.R. § 233.1(e), quoted in Complaint ¶144

• Federal law does not require the words “regular” or “formerly” to trigger the prohibition. Any crossed-out price displayed next to a lower sale price carries the same legal weight and must reflect a real prior price.
• Shein’s use of strikethrough text and percentage-off descriptors (e.g., “-33%”, “-42%”) falls squarely within the conduct this regulation was written to prohibit.

“John Doe is a retailer of Brand X fountain pens, which cost him $5 each. His usual markup is 50 percent over cost; that is, his regular retail price is $7.50. In order subsequently to offer an unusual ‘bargain,’ Doe begins offering Brand X at $10 per pen. He realizes that he will be able to sell no, or very few, pens at this inflated price. But he doesn’t care, for he maintains that price for only a few days. Then he ‘cuts’ the price to its usual level—$7.50—and advertises: ‘Terrific Bargain: X Pens, Were $10, Now Only $7.50!’ This is obviously a false claim.”

— 16 C.F.R. § 233.1(c), quoted in Complaint ¶143

• The FTC literally wrote this exact hypothetical decades ago. The complaint argues Shein’s pricing behavior is the textbook version of what regulators warned against.
• The complaint’s price tracking evidence shows Shein’s products were posted at inflated reference prices only briefly, if at all, before reverting to their permanent “sale” price, matching the pattern described in this FTC illustration precisely.

“Fake list prices have a strong influence on purchase outcomes, with a 1-dollar increase in the list price having the same positive effect on purchase likelihood as a 77-cent decrease in the actual selling price.”

— Donald Ngwe, Fake Discounts Drive Real Revenues in Retail, Harvard Business School (Oct. 14, 2017), cited in Complaint ¶136

• This quantifies the economic injury. Every dollar Shein added to a fake reference price functioned as a near-equivalent discount in terms of convincing someone to buy. The scam is not subtle; it is scientifically validated.
• The complaint uses this research to establish that Shein’s consumers did not make free, fully-informed choices. Their purchase decisions were mechanically manipulated by engineered price illusions.

What You Were Told vs. What Was Actually Happening

Shein’s public-facing marketing and its actual pricing behavior operated in direct contradiction. The complaint documents this gap across multiple brands and product lines.

• Shein claimed it was offering “genuine discounts” from “former and regular prices” shown in strikethrough text. The reality: third-party price tracking via AliPrice.com and Microsoft Shopping confirms that across every brand examined, including Mulvari, DAZY, Anewsta, GLOWMODE, MOTF, Emery Rose, and Lune, products almost never reached their advertised reference prices in the six to twelve months preceding any given sale listing.
• Shein’s website claimed the crossed-out price represented what the item “was” priced at and that the sale was a limited-time reduction. The reality: the complaint alleges these “sales” ran continuously throughout the majority of any given calendar year, meaning there was no limited-time reduction because the product was never meaningfully offered at the higher price.
• Shein presented itself as a consumer-first company making fashion “accessible to all.” The reality: France’s antitrust authority (DGCCRF) reviewed Shein’s website from October 1, 2022 to August 31, 2023 and found that 57% of advertised deals were not offering a lower price at all, 19% had less of a discount than advertised, and 11% were actually secret price increases, meaning the “sale price” was higher than the real market price.
• Brand descriptions such as MOTF’s stated it was built on “a commitment to timeless, versatile style” and “quality.” The reality: the MOTF Premium Slim Cami Top was listed at a $18.79 reference price but, according to price tracking data, never actually sold at that price during the preceding six months. Its real price was consistently near $10.79.
• Shein did not verify that its reference prices reflected real prevailing market prices. The reality: the complaint alleges Shein “had no policies or procedures to verify and update the reference prices on a daily basis,” as required under California’s False Advertising Law.

Profit-Maximization at All Costs

The complaint documents a pricing architecture that was not a mistake or an oversight. It was a deliberate revenue strategy deployed at massive scale by a company that understood exactly what it was doing.

• Shein was projected to earn $2 billion in global net income in 2025, nearly double its $1.1 billion profit in 2024. In the U.S. alone, Shein generated almost $10 billion in sales in Q1 2025. The complaint alleges this revenue was built, in part, on deceptive pricing that caused consumers to pay more than they would have if honestly informed.
• The complaint explicitly models the harm: a product with a true market value of $30 is advertised as having a “regular” price of $100 and being “on sale” at 60% off. Because consumers anchor value to the reference price, the company can sell the $30 product for $40, capturing a $10 premium per unit that exists only because of the fake reference point.
• The complaint cites Harvard Business School research establishing that a fake $1 increase in a list price has the same purchase-driving power as a real $0.77 price decrease. At the scale of millions of transactions, this asymmetry translates into billions of dollars in revenue that depended on consumers not understanding what the price actually was.
• The scheme was applied across at least nine named Shein brands, from budget sub-brands like EZwear to premium-positioned lines like Anewsta and MOTF, suggesting this was a platform-wide commercial strategy rather than the work of one rogue product manager.
• The EU flagged this practice in May 2025. France acted with a 40 million euro fine in July 2025. The U.S. lawsuit was filed in May 2026. Shein continued the practice throughout.

How Shein Exploited the System’s Blind Spots

The complaint identifies specific regulatory gaps and structural ambiguities that Shein’s pricing scheme was designed to slip through.

• Federal FTC regulations under 16 C.F.R. § 233.1 require that a “former price” used in comparative advertising be a bona fide price at which the item was “openly and actively offered for sale, for a reasonably substantial period of time, in the recent, regular course of business.” The regulation does not require that the item actually sold at that price. Shein allegedly exploited this gap by briefly listing products at inflated reference prices without ever seriously attempting to sell at those prices, then using those brief postings as the legal basis for its “discount” claim.
• Because Shein’s branded products (DAZY, MOTF, Emery Rose, Glowmode, etc.) are sold almost exclusively through Shein’s own platforms, there is no independent third-party retailer to establish a true market price. Shein was essentially its own only competitor, meaning it could set a fictitious “market” reference price with no external check. The complaint argues that for these exclusive products, the prevailing market price is necessarily the discounted price, making the reference price structurally fraudulent.
• Shein also operated “standalone” brand websites (Dazy.com, MOTF.com, shopEmeryRose.com, shopGlowmode.com) that appeared to be independent retail channels but were owned and controlled by Roadget Business Pte Ltd. or its affiliates. This created an illusion of independent market validation for the reference prices, when in reality all channels were setting identical prices under unified corporate control.
• The complaint cites 16 C.F.R. § 233.5, which prohibits fake limited-duration sales. Shein ran percentage-off descriptors suggesting temporary urgency on items that were available at “sale” prices the vast majority of the time, potentially for the entire Class Period, which may extend back beyond four years from filing.
• California’s False Advertising Law under Cal. Bus. & Prof. Code § 17501 requires that a “former price” must have been the prevailing market price within the three months immediately preceding its advertisement, and that if it was not, the date the former price applied must be “clearly, exactly and conspicuously stated.” Shein did not provide such disclosures and, the complaint alleges, had no internal process to verify or update reference prices daily as the law requires.

How Long This Has Been Happening

The complaint places Shein’s deceptive pricing practice as running continuously from at least 2022, through multiple regulatory warnings, and still active at the time of filing in May 2026.

Societal Impact Mapping

Public Health and Consumer Welfare

Fake discount pricing causes measurable psychological and financial harm to the consumers targeted by it.

• Decades of academic research cited in the complaint establish that consumers exposed to false reference prices are mechanically manipulated: their perceived value of a product inflates, their willingness to search for a lower price decreases, and their likelihood of purchase increases, all without any real change in what they are receiving. This effect holds even when reference prices are “implausibly high.”
• The complaint documents that three named plaintiffs each made repeated purchases across months and years, trusting that the sale prices were genuinely discounted. Each states she would not have purchased, or would have paid less, had Shein been honest. Across millions of consumers who interacted with Shein’s U.S. platform (6.78 million new U.S. users registered in 2024 alone), the cumulative effect of suppressed price-search behavior and inflated willingness to pay represents systematic financial harm to people who, by definition, chose Shein because they believed it offered affordable fashion.
• The scheme specifically targeted shoppers seeking value. Shein’s brand architecture, from size-inclusive plus-size lines to activewear marketed as “accessible to all,” was designed to attract budget-conscious consumers. Those consumers are precisely the population most harmed by paying a fake “sale” price that was actually the permanent price inflated by a fake reference point.

Economic Inequality

Shein’s customer base is disproportionately younger, lower-income women. The deception extracted a financial premium from people with the least capacity to absorb it.

• The DAZY brand was explicitly marketed to “Gen-Z IT girls” and described as a brand for “extraordinary” young women. The EZwear and Curve/Petite lines targeted everyday, budget-minded buyers. These are not the demographics with disposable income to absorb the price premium created by fake reference prices.
• The complaint illustrates that the harm was not trivial at the individual level: Plaintiff Severino paid $22.57 for a leopard print set with a reference price of $32.39 that the item likely never reached. She paid $16.07 for a lace dress advertised as marked down from $29.89. The Mulvari bodysuit Plaintiff Brownlee purchased for $7.69 had a typical median market price of $7.25. These are not large sums in isolation, but they compound across every purchase, across every Shein customer, across years of the scheme.
• The complaint alleges Shein siphoned sales away from honest competitors who priced fairly, further distorting the market at the expense of retailers who did not manufacture false urgency or inflated reference prices.

The French Fine Was Not Justice

France’s 40 million euro fine in July 2025 is the only regulatory penalty documented in this source material. Measured against Shein’s documented scale, it was inadequate as a deterrent.

• Shein reported $1.1 billion in net profit in 2024 and was projected to earn $2 billion in 2025. The French fine of 40 million euros (approximately $44 million USD) represents roughly 4% of one year’s net income at 2024 levels, and approximately 2% of the projected 2025 figure.
• The French audit covered only the period from October 1, 2022 to August 31, 2023: a ten-month window. Shein’s deceptive pricing, per the U.S. complaint, continued through at least May 2026, meaning the conduct the French fine was meant to deter ran for at least two and a half more years after the audit period ended.
• As of the filing of the U.S. lawsuit, the complaint alleges Shein’s false pricing remained “ongoing.” There is no indication in the complaint that any U.S. regulatory action has been taken. The class action is the primary accountability mechanism available to American consumers at this time.
• The French fine included no reported structural requirement to change Shein’s pricing architecture, replace its reference price system, or provide restitution to the consumers overcharged across the audit period.