Online marketplace Temu under potential European Union penalty for selling prohibited goods
The European Commission has launched an investigation into Temu, a Chinese e-commerce platform, for potential breaches of the Digital Services Act (DSA). The probe was initiated in October 2024, following concerns about the sale of illegal products on the platform, including baby toys and small electronics that do not comply with EU rules.
The preliminary findings suggest that Temu's risk assessment is inaccurate, relying on generic industry information instead of specific data about its marketplace. This has likely led to inadequate measures to prevent the dissemination of illegal products, posing a high risk for EU consumers.
If the breach is confirmed after Temu's opportunity to respond, the Commission can impose a fine of up to 6% of Temu's worldwide annual turnover under the DSA. The investigation also includes examining other potential breaches, such as the platform's recommendation algorithms and the use of addictive design features.
In addition to the DSA investigation, the CPC network, a network of European consumer protection authorities, is taking action against Temu for violating EU law. The network's investigation focuses on practices that violate EU consumer protection laws, including false discount actions, fake reviews, and missing and misleading information on consumer rights.
Commission President von der Leyen emphasized that the economic relations between the EU and China must become more balanced. The Brussels procedure against Temu occurs during a time of growing economic tensions with China, which may impact the outcome of the investigations.
EU Commission Vice-President Henna Virkkunen emphasized that consumer safety on the internet is non-negotiable in the EU. Temu has been reported to have unserious sellers reappear on the platform even after being blocked, and it hides contact information, making it difficult for customers to contact the platform.
At this time, no specific sanctions or penalties have been announced against Temu by the CPC network or the EU commission. The authority led by Ursula von der Leyen has not yet made a final decision on whether Temu is violating EU law. If Temu does not address the allegations or refute them, the commission can formally establish a violation, which could result in a fine.
The DSA represents a significant regulatory framework aimed at improving consumer safety and holding online platforms accountable for content and products offered in the European Single Market. The investigation against Temu underscores the Commission's commitment to enforcing these rules and protecting EU consumers.
[1] EU Commission Press Release: Temu Investigation
[2] EU Observer: Temu Faces EU Probe Over Illegal Products
[3] Reuters: Temu Under Investigation for Breaching EU Digital Services Act
[4] CNBC: EU Commission Investigates Temu for Breaching Digital Services Act
The investigation into Temu, a Chinese e-commerce platform, has uncovered potential issues with its technology, as the preliminary findings suggest that its risk assessment relies on generic industry information rather than specific data about its marketplace, which may have resulted in insufficient measures to prevent the sale of illegal products.
The probe also encompasses examining the platform's recommendation algorithms and the use of addictive design features, indicating a broader concern about the technology being used by Temu to operate its online marketplace.
