Shopify is facing a $60M lawsuit brought by Redline Steel, a US-based home decor brand, which accuses the company of severe technical mismanagement and negligence that allegedly led to the collapse of its operations.
The lawsuit highlights several critical failures by Shopify including:
- Meta Pixel Mismanagement — According to the lawsuit, Shopify's 2021 integration of Meta's sales channel introduced significant errors such as caching issues that routed data through outdated Pixels, making it impossible for Redline to track purchases accurately, rendering its advertising campaigns ineffective.
- DNS & IP Address Discrepancies – The lawsuit highlights discrepancies in Shopify's DNS settings, which affected Redline's website accessibility. The mismatch, along with Shopify's failure to resolve its shops.myshopify.com subdomain for an extended period of time, disrupted Redline's domain connections during a critical period and added to the company's' operational challenges.
- Breach of Contractual Obligations – The lawsuit claims that Shopify failed to uphold its contractual obligations to notify merchants of critical updates, resolve misalignments between its managed DNS settings and network configurations, and properly manage integrated tools like Meta Pixel.
If Redline's allegations are proven in court, Miller Victor of TechBullion says “they could signal broader systemic flaws in Shopify's infrastructure, potentially affecting millions of users worldwide.”
Victor notes that the lawsuit is likely to draw increased scrutiny of Shopify's technical infrastructure and customer service practices, and pressure the company to improve its technical infrastructure, enhance communication with merchants about critical updates and issues, and provide more robust support to address technical problems.