The European Commission (EC) has provisionally determined that Chinese retailer Temu did not fulfil its duty under the Digital Services Act (DSA) to adequately evaluate the risks associated with the spread of illegal products on its platform.
The commission’s ‘mystery shopping exercise’ reportedly revealed a significant likelihood of encountering noncompliant items such as baby toys and small electronics, on Temu.
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It also claimed Temu’s October 2024 risk assessment was inaccurate and criticised it for relying on general industry data rather than specifics about its own operations.
The EC believes this approach potentially led to ineffective measures to prevent the spread of illegal goods.
The proceedings against the retailer, which began on 31 October 2024, will also examine other potential violations, including the use of addictive design features, transparency in recommendation systems, and data access for researchers.
Temu, a unit of Chinese-run PDD Holdings, has been given the opportunity to respond to these preliminary findings and review the commission’s investigative file. Additionally, the European Board for Digital Services will provide input.
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By GlobalDataShould these initial assessments be confirmed, the commission could issue a noncompliance decision under Article 34 of the DSA.
This could possibly result in fines up to 6% of Temu’s total global annual revenue and mandating corrective actions. It may also lead to a period of heightened supervision, stated the EC.
EC tech sovereignty, security and democracy executive vice-president Henna Virkkunen said: “We shop online because we trust that products sold in our single market are safe and comply with our rules. In our preliminary view, Temu is far from assessing risks for its users at the standards required by the Digital Services Act.
“Consumers’ safety online is not negotiable in the EU – our laws, including the Digital Services Act, are the foundation for a better protection online and a safer and fairer digital single market for all Europeans.”
The EC investigation involves collaboration with national Digital Services Coordinators, customs and market surveillance authorities, and other relevant entities.
It runs concurrently with an independent probe by the Consumer Protection Cooperation Network and a product safety sweep to ensure a thorough and unified response to concerns regarding Temu’s practices.
Temu launched in Europe in early 2023. Last year, the fast-fashion e-commerce retailer was recognised as a Very Large Online Platform under the DSA.
This February, the consumer protection organisation BEUC presented evidence of the sale of illegal and noncompliant products on Temu’s marketplace.
