Temu Accused by EU of Failing to Prevent Illegal Sales

• The European Commission claims Chinese marketplace Temu is violating EU rules by not stopping the sale of illegal goods, potentially leading to a large fine.

The European Commission announced on Monday that the Chinese online marketplace Temu is in violation of EU regulations. According to the Commission, the company is not doing enough to prevent the sale of illegal products on its platform. These findings could ultimately result in a fine of up to 6% of Temu’s annual global turnover. The Commission’s statement highlighted a significant risk to EU consumers. It stated that they are highly likely to encounter illegal products on the platform.

Specific Violations and Findings

An analysis conducted through a “mystery shopping exercise” provided the evidence for the Commission’s claims. Researchers found that consumers shopping on Temu were very likely to find non-compliant products among the offerings, such as unsafe baby toys and small electronics. The Commission also noted that Temu’s risk assessment was inadequate. It was based on general industry information instead of specific details about its own platform.

These preliminary findings, if confirmed, would place Temu in breach of the Digital Services Act (DSA). A final decision could lead to substantial penalties, including fines of up to 6% of the company’s total worldwide annual turnover. The Commission has given Temu a few weeks to respond to the findings, although an exact deadline was not provided. A spokesperson for Temu stated that the company would continue to “cooperate fully” with the Commission.

Broader Investigation into Temu’s Practices

The current findings are just one part of a larger ongoing EU investigation into Temu’s practices. The company is also suspected of violating EU rules regarding the use of “addictive design features.” These are features that are deliberately created to make users spend more time on a platform. Additionally, the EU is investigating Temu’s transparency related to its recommendation systems.

The investigation also includes a review of Temu’s access to data for researchers. The EU’s focus on these broader issues reflects a concerted effort to regulate large digital platforms and protect consumer rights. The outcome of this comprehensive investigation could set a significant precedent for how other global online marketplaces operate within the European Union.