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European Commission says Temu potentially in violation of Digital Services Act as billions of low-value parcels flood into blocTemu is not doing enough to prevent the sale of illegal products through its online platform into the EU, in violation of new digital rules, the European Commission said, opening the possibility of a large fine.
“Evidence showed that there is a high risk for consumers in the EU to encounter illegal products on the platform,” the Commission said on Monday.
“Specifically, the analysis of a mystery shopping exercise found that consumers shopping on Temu are very likely to find non-compliant products among the offer, such as baby toys and small electronics.”
Digital rules
Temu and competitor Shein are classed as “very large online platforms” under the Digital Services Act (DSA), which means they have to comply with stricter rules than smaller firms.
Temu alone has nearly 94 million average monthly active users in the EU, while some 4.6 billion low-value packages entered the EU last year, doubling from 2023, with 91 percent shipped from China.
The Commission said its preliminary findings, if confirmed, could lead to a fine of up to 6 percent of Temu’s annual global turnover.
Temu will have an opportunity to respond to the findings in the coming weeks, the Commission said.
The body said Temu’s risk assessment was inadequate, being based on general industry information rather than the specifics of its platform.
“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,” said Commission executive vice-president Henna Virkkunen in a statement.
The preliminary findings are part of a broader formal investigation into Temu’s business that the EU launched in October of last year.
The Commission is also looking into suspected fake reviews on Temu, fake discounts, insufficient vendor information and potential violations involving addictive app design.
Temu said it would continue to “cooperate fully” with the Commission.
Shein fined
The French government fined Temu competitor Shein 40 million euros (£34.7m) over similar issues earlier this month, saying the company used deceptive marketing practices such as fake discounts, and failed to provide sufficient information about the environmental impact of its products.
France’s Ministry of Economy said in a statement that it took the measure based on an investigation from 1 October, 2022 to 31 August, 2023 that found Shein’s French subsidiary, Infinite Style E-commerce, had “misled consumers” about discounts.
Shein’s discounts were not based on an item’s lowest price over the previous 30 days, as required by French regulations, and in some cases the company raised prices before applying a reduction, the ministry said.
As a result, 57 percent of advertised promotions actually offered no reduction in price, while 11 percent represented price increases, according to the ministry’s findings.
New controls
Shein also failed to provide information on the environmental quality of the waste-generating products it markets in France, resulting in a fine of just under 1.1m euros, the ministry said in a separate statement.
The EU has taken several measures as it tries to deal with the huge increase in low-value parcels entering the bloc from China, with the Commission saying in February it would remove the duty-free treatment of such parcels in 2028.
In May European Trade Commissioner Maros Sefcovic proposed a 2 euro fee for small parcels entering the bloc.
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