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The European Union accused Chinese online shopping giant, Temu, on Monday of violating the bloc’s digital regulations by failing to “properly” evaluate the risks associated with illegal products.
EU officials believe that Temu is inadequate in safeguarding European consumers from hazardous items and may not be taking sufficient steps to address risks to its users.
“Evidence showed that there is a high risk for consumers in the EU to encounter illegal products on the platform,” the European Commission said in its preliminary finding.
They referenced a mystery shopping investigation that indicated consumers could “very likely encounter non-compliant products in the offerings, such as children’s toys and small electronics.”
Despite having just entered the European market in 2023, Temu has gained immense popularity, boasting an average of 93.7 million monthly active users across the 27 EU member states.
The EU criticised Temu’s risk assessment from October 2024 as “inaccurate,” asserting it was based on general industry data rather than specific information pertinent to its platform.
Temu is currently under investigation as part of the Digital Services Act (DSA), a comprehensive law that mandates major tech companies to enhance protections for European consumers online and improve content regulation. It will have the opportunity to respond to the findings presented by EU regulators and present its defence, although there is no specified duration for how long the investigation can take.
If it is determined that Temu is in violation, the EU has the authority to impose a fine on the company. Penalties under the DSA can reach up to six per cent of a company’s total annual global revenue and may require the company to implement changes to rectify violations.
Initiated in October, the EU investigation continues to explore other potential violations, including the application of addictive design features that could adversely affect users’ physical and mental health, as well as how Temu’s algorithms promote products and content.
There are also ongoing DSA investigations involving other Chinese online retailers such as AliExpress, as well as social media platforms like Facebook, Instagram, X, and TikTok.
Additionally, the EU aims to address the influx of inexpensive packages entering the bloc each year, with a proposal currently under consideration for a flat fee of €2 per parcel.
Last year, 4.6 billion parcels were delivered to the EU, averaging more than 145 packages per second, with 91 per cent originating from China. The EU anticipates that these numbers will continue to rise.
