The European Commission has raised serious concerns about online marketplace Temu, accusing it of breaching key consumer protection rules under the Digital Services Act (DSA).
In a preliminary finding issued Monday, the Commission said Temu failed to properly assess the risks of illegal or non-compliant products being sold on its platform, putting millions of European consumers at risk.
Temu, the Chinese e-commerce platform, which is winning the hearts of many online shoppers with free shipping, now faces a possible fine of up to 6% of its global annual turnover, according to a statement released by the European Commission.
The Commission’s investigation, launched in October 2024, found that shoppers on Temu are highly likely to encounter illegal products, particularly baby toys and small electronics that do not meet EU safety standards.
At the heart of the Commission’s case is an October 2024 risk assessment by Temu, which regulators say was flawed.
Rather than relying on data specific to its platform, Temu allegedly based its analysis on general industry insights, failing to capture the unique risks posed by its own marketplace operations.
“This may therefore have led to inadequate mitigation measures against the dissemination of illegal products,” the Commission said.
“If the Commission’s preliminary views were to be ultimately confirmed, the Commission would adopt a non-compliance decision finding that Temu is in breach of Article 34 of the DSA.
“Such a decision could entail fines of up to 6% of the total worldwide annual turnover of the provider and order the provider to take measures to address the breach.
“A non-compliance decision may also trigger an enhanced supervision period to ensure compliance with the measures the provider intends to take to remedy the breach,” the Commission stated.
On 31 October 2024, the Commission initiated proceedings against Temu in collaboration with national Digital Services Coordinators, customs authorities, market surveillance authorities, and other relevant third parties, in line with the principles outlined in the E-commerce Communication.
The Commission said the investigation is proceeding in parallel with a separate investigation by the Consumer Protection Cooperation (CPC) Network and the first product safety sweep, ensuring a comprehensive and coordinated approach to addressing concerns around Temu’s practices.
With more consumers turning to online platforms for shopping, EU regulators are intensifying efforts to ensure that digital marketplaces do not become safe havens for unsafe or illegal products.
The DSA aims to protect consumers’ health, safety, and rights, while maintaining a level playing field in the Digital Single Market.