Chinese fast fashion retailer Shein is facing a lawsuit that claims the clothing maker’s copyright infringement is so aggressive it amounts to racketeering.
This week’s filing claims Shein is in violation of the Racketeer Influenced and Corrupt Organizations Act, better known as RICO, a law originally designed to prosecute organized crime.
“Shein has enriched himself by committing individual offenses again and again, part of a long and continuous pattern of racketeering, which shows no signs of abating,” the filing states.
In an organized effort to create up to 6,000 new items a day, Shein uses a “byzantine shell game of a corporate structure” to rip off designers, a coordinated illegal operation that can best be combated by using of RICO statutes, according to the lawsuit.
The lawsuit is just the latest in a series of difficulties Shein has faced. In May, a bipartisan group of two dozen lawmakers asked the Securities and Exchange Commission to hold back an initial public offering by Shein until it verifies that it is not using forced labor from the Uyghur population to predominantly Muslim country.
The lawsuit, filed by three fashion designers in the U.S. District Court for the Central District of California, alleges that “Shein produced, distributed, and sold exact copies of their creative work.”
“The issue here, inexplicably, are truly exact copies of the copyrighted graphic design appearing on Shein products,” the civil lawsuit states.
Shein did not immediately respond to a request for comment on Friday.
The designers seek unspecified damages and want an injunction to prevent further racketeering activity.
Shein did not say if he plans to go public this year, but there are reports the company is raising funds in anticipation of a U.S. listing before the end of the year.
Shein spokesman Peter Pernot-Day said the company takes transparency across its entire supply chain seriously.
But a congressional report last month issued a scathing criticism of Shein and another Chinese fashion retailer, Temu.
The report is part of an ongoing congressional investigation into products offered to US consumers that may be made with forced labor in China. As part of the investigation, the committee sent letters in early May to the brands Nike and Adidas, as well as Shein and Temu, requesting information on their compliance with the anti-forced labor law.
Shein said at the time that it is “company policy to comply with customs and import laws of the countries in which we operate.” He also said he has “zero tolerance” for forced labor and has a robust system in place to ensure compliance with US laws.