Temu in breach of DSA for selling illegal products, preliminary findings suggest

The European Commission found that Chinese online retailer Temu is infringing the Digital Services Act (DSA) by not properly assessing the risks of illegal products sold on its marketplace.

On October 31st, 2024, the European Commission opened formal proceedings against Temu. The executive branch of the EU was concerned that Temu had taken insufficient measures to prevent the sale of unsafe, counterfeit, or non-compliant products, which could be harmful to consumers’ health and safety, the environment, and fair competition.

“We want to ensure that Temu is complying with the Digital Services Act. Particularly in ensuring that products sold on their platform meet EU standards and do not harm consumers. Our enforcement will guarantee a level playing field and that every platform, including Temu, fully respects the laws that keep our European market safe and fair for all,” Executive Vice President Margrethe Vestager said in a statement at the time.

Temu responded by saying it takes “its obligations under the DSA seriously, continuously investing to strengthen our compliance system and safeguard consumer interests on our platform.”

On Monday, the European Commission announced its preliminary findings.

According to the Commission, there’s evidence that consumers in the EU are at high risk of encountering illegal products on Temu’s platform. During a “mystery shopping” exercise, researchers found that consumers shopping on Temu are very likely to find non-compliant products among the offers, such as baby toys and small electronics.

In addition, Temu’s risk assessment of October 2024 was inaccurate and relied on general industry information rather than on specific details about its own marketplace.

“This may therefore have led to inadequate mitigation measures against the dissemination of illegal products,” the European Commission concludes.

The proceedings against Temu will continue, and the European Commission will investigate the effectiveness of the company’s mitigation measures, its use of addictive design features, the transparency of its recommendation systems, and its access to data for researchers.

“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,” Henna Virkkunen, Executive Vice-President for Tech Sovereignty, Security and Democracy, says in response to the European Commission’s preliminary findings.

If found guilty of breaching the DSA, Temu could face a fine of up to 6 percent of its global annual turnover, which could be three to four billion euros.