Shein accused of using a mind-boggling mix of shell companies and algorithms to steal clothing designs, new RICO lawsuit alleges

• Fast fashion retailer Shein was accused in a federal lawsuit of directly copying designers' work.
• The lawsuit also accuses Shein of racketeering and claiming copyright infringement is central to the business model.

Fast fashion giant Shein has been accused by three designers of stealing designs and using complex algorithms and third-party companies to clear their tracks in a federal lawsuit.

The civil lawsuit, filed in Los Angeles on Tuesday, claimed that the Chinese fast-fashion company, which lists close to 6,000 items on its app daily, stole exact copies of the designers' works as part of a pattern of copyright infringement central to its e-commerce model — staying ahead on fashion trends for voracious consumers.

Shein, one of the largest and most profitable fashion retailers in the world, was accused of repeatedly stealing designs, and blaming it on shell companies and third-party vendors it operates when confronted about the practice, the lawsuit alleged.

The suit went on to allege that Shein's practice of using a conglomeration to facilitate the copyright infringement amounts to racketeering.

"Shein has grown rich by committing individual infringements over and over again, as part of a long and continuous pattern of racketeering, which shows no sign of abating," the suit alleges.

A representative for Shein did not immediately respond to Insider's request for comment.

One of the designers suing the company, Krista Perry, claimed that after her poster design was stolen, she confronted the company. They said a third-party vendor was to blame, and claimed the product had low sales, per the lawsuit.

They also offered her $500, an offer that the lawsuit claimed was consistent with other designers' experiences.

"Shein made its offer as if it were a mom-and-pop operation rather than one of the richest enterprises in the world," the lawsuit states.

In a statement sent to Insider, Shein said that the company took claims of infringement seriously.

"We take swift action when complaints are raised by valid IP rights holders," the statement said. "We will vigorously defend ourselves against this lawsuit and any claims that are without merit."

It's hardly the first time that Shein has faced legal action related to allegations of copyright infringement.

Major brands such as Oakley and Ralph Lauren have sued the company on similar grounds — without the racketeering allegation — in the last year, per The Wall Street Journal.

Among copyright infringement and intellectual property claims, the lawsuit claims that Shein engaged in racketeering, which refers to illegal acts conducted by an organization via fraud, or other measures of widespread corruption.

According to the Justice Department, the RICO Act of 1970 initially dealt with organized crime syndicates infiltrating legitimate industries. The law encompasses criminal activity, but also has provisions for civil legal action, as sought by this lawsuit.