French authorities impose a fine of approximately 6.8 billion yen on Shein—57% "sale" recognized as zero discount, symbolizing strengthened EU regulations

1 The Largest Sanctions Ever: What's Inside

The €40 million fine imposed by French authorities is an unusually high amount for a mere price display violation. Based on the "Anti-Fraud and Consumer Trust Restoration Law (EGALIM 3)" passed last August, the DGCCRF monitored Shein's web/app displays over 11 months starting from August 2024. By comparing over 1,500 price histories and screenshots,

• 57% were "without discount"

• 19% were "exaggerated discount rates"

• 11% were "actually price increases"
  
  
  

a "false sale" was recognized.ft.comreuters.com

Furthermore, they requested supporting documents for claims on the site such as "25% reduction in Scope 1+2+3 emissions by 2028," but the company has not submitted them. In light of the EU's "Green Claims Directive" draft, environmental misrepresentation was also subject to aggravated evaluation.economie.gouv.fr

2 The Trick of "Always 90% OFF"

Shein introduces up to 6,000 items daily and normalizes countdowns like "90% OFF until ● month ● day." However, in the EU, a rule was introduced in May 2022 that only allows the display of actual discount rates compared to the lowest price in the past 30 days.

The 57% that was judged to be in violation of this rule. Actual code analysis revealed multiple traces where the platform side overwrote the "reference price" column simultaneously with price revisions.bnnbloomberg.ca

3 Shein's Rebuttal and "Corrected" Statement

After the fine was announced, Shein immediately issued a statement emphasizing "transparency" and stating that they had updated to French standards since the summer of 2024. They also mentioned disclosing the discount rate calculation logic and accepting external audits once a year. However, the DGCCRF emphasized that it was "a problem of commercial practices, not a technical bug," and warned that they would continue "spot checks."cp24.com

4 Pursuit under the EU Digital Services Act

Separately from this sanction, the European Commission formally requested Shein in May 2025, under Article 36 of the DSA, to respond within a month with explanations of "algorithm recommendation systems" and "dangerous product removal processes." If the response is insufficient, a sanction of up to 6% of annual sales (estimated to exceed $2.8 billion) will be imposed.reuters.com

In the context of the Japanese market, the maximum surcharge for violation of the Act against Unjustifiable Premiums and Misleading Representations is 3% of sales. However, the DSA has a deterrent power of a different magnitude as it is based on "total sales," forcing cross-border e-commerce companies to apply European standards globally.

5 Can Japan's Act against Unjustifiable Premiums and Misleading Representations Follow Suit?

In Japan, the revised Act against Unjustifiable Premiums and Misleading Representations came into effect in October 2023, making stealth marketing subject to corrective orders. However, regarding price display, it remains at the level of the "Dual Pricing Guidelines (Case Studies)" with weak legal binding force. Following the French ruling, the Consumer Affairs Agency has hinted at making it a topic in the "Digital Platform Transaction Transparency Study Group."

The Ministry of Economy, Trade and Industry is also proposing to the Ministry of Finance to review the **minimum tax exemption for low-priced imported goods (¥16,667)**. Similar to the EU's consideration of a **€2 per item "cross-border e-commerce handling fee,"** the aim is to undermine the source of price advantage.ft.com

6 The Growth Model of "Ultra-Fast Fashion"

Shein recorded $38 billion in sales and $1 billion in net profit in 2024, with a net profit margin about twice that of ZARA. By detecting trends with AI and using a "test sale → mass production" model with small lots and a wide variety of products, they minimized inventory risk.The average selling price is $9, and the gross profit margin is said to exceed 60%.digital-shift.jp

However, regulatory tightening is accelerating in the EU and North American markets, which account for 80% of sales. In the U.S., the abolition of the **de minimis exemption for items under $800** will take effect in May 2025, causing cross-border e-commerce air cargo to plummet by 43% in the first month.reuters.com

7 Impact on the Japanese Market

In March 2025, Shein will introduce "Third-party logistics" in Japan. They aim for next-day delivery from domestic warehouses, but without clear price display rules, it is nothing but the "import of a perpetual sale culture."note.com

Marketing that relies on influencers is also shaken by the strengthening of stealth marketing regulations. The Consumer Affairs Agency in Japan has clearly stated that **"violations of advertising labeling obligations also hold the advertiser responsible,"** potentially expanding the scope of penalties to advertising agencies and PR businesses.

8 The Blind Spot of Environmental Claims (Green Claims)

The DGCCRF also pointed out the lack of support for the company's emission reduction targets. The EU plans to implement the **"Green Claims Directive" in 2026, requiring verification by an independent third party** when making environmental claims. In Japan, the Ministry of the Environment plans to revise the "Carbon Footprint Display Guidelines," but it remains a voluntary standard.

9 The "De-Deflation" Pressure on Cross-Border E-commerce

The pace of introducing 3,000 new products daily is, "possible only because inventory loss is minimized," the company claims. However, cheap mass production and short-cycle consumption have been criticized as the root causes of environmental burden. This fine is not only for "price manipulation" but also a price tag for the new risk of "environmental misrepresentation."

Japanese apparel companies also frequently use "weekly price revisions" and "EC-exclusive time sales," but without showing the basis for the display, they cannot escape being treated as a "second Shein."

10 Self-Defense Measures Consumers Should Take

1. Use price tracking tools
   By taking history with browser extensions, false discounts can be detected.
   
   

2. Check for independent third-party verification of green certifications
   In the EU, "third-party nature of eco-labels" is planned to be mandatory.
   
   

3. Consider return shipping costs and customs for cross-border e-commerce
   With the reduction of tax exemption, cases where "return shipping + consumption tax" ultimately make it more expensive are increasing.

11 Three Measures Required for Companies

• Transparency of dynamic pricing logic

• Disclosure of LCA (Life Cycle Assessment) for environmental claims

• Establishing new revenue sources such as closed-loop recycling

12 Legislative and Administrative Developments

• The Consumer Affairs Agency plans to put the **"Dual Pricing Guidelines"** out for public comment by fiscal year 2025.

• The Ministry of Finance plans to discussthe minimum tax exemption for cross-border e-commerce in the 2027 tax reform.

• The Ministry of the Environment aims to implementa labeling system for greenwashing countermeasures by April 2026.

13 Fashion in the "Post-Perpetual Sale Era"

To break away from price competition, it is necessary to incorporate circular services such as leasing, remaking, and resale. ZARA has opened a second-hand marketplace within its app, and H&M is expanding its monthly subscription clothing rental. Shein has also started experimentally offering repair credits in the UK.

14 Conclusion—Transparency as a New Competitive Edge

The fine this time exceeds the "cost corresponding to the violation," showing that without transforming the business model itself, recurrence prevention is impossible. What Japanese businesses, administrations, and consumers should learn from this case is the lesson that the sense of affordability that cannot ensure transparency will not last long.

List of Reference Articles

1. Reuters “France fines retailer Shein 40 million euros for misleading discounts” (2025/07/03) reuters.com

2. Financial Times “Shein hit with €40 mn fine in France over misleading discounts” (2025/07/04) ft.com##