This article is brought to you in association with the European Commission.
Today, the Commission preliminarily found Temu in breach of the obligation under the Digital Services Act (DSA) to properly assess the risks of illegal products being disseminated on its marketplace.
Evidence showed that there is a high risk for consumers in the EU to encounter illegal products on the platform. Specifically, the analysis of a mystery shopping exercise conducted by the Commission found that consumers shopping on Temu are very likely to find non-compliant products among the offer, such as baby toys and small electronics.
According to the Commission’s analysis, Temu’s risk assessment of October 2024 was inaccurate and relying 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 Commission will continue its investigation in relation to other suspected breaches opened in October 2024, including the effectiveness of its mitigation measures, the use of addictive design features, the transparency of its recommendation systems, and its access to data for researchers.
Next Steps
The preliminary findings sent today by the Commission are without prejudice to the final outcome of the investigation, as Temu now has the possibility to exercise its rights of defence by examining the Commission’s investigation file and by replying in writing to the Commission’s preliminary findings. In parallel, the European Board for Digital Services will be consulted.
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.
Background
On 31 October 2024, the Commission initiated proceedings against Temu. The Commission’s investigation is being carried out in cooperation 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, and 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.
The steady surge in the volume of products sold online in the EU is accompanied by a rise of unsafe, counterfeit, or non-compliant products, which could be harmful for consumers’ health and safety, the environment, and fair competition in the Digital Single Market.
To counter these risks, the DSA includes obligations to counter illegal content online. It requires platforms to put in place user-friendly mechanisms allowing users to flag illegal content and to appeal to content moderation decision. The DSA also includes specific rules tailored to online marketplaces, such as trader traceability to ensure that all online marketplaces gather information on traders selling their products or services. The DSA also prohibits dark patterns, and specifies rules on advertising and detailed transparency obligations, including how products are recommended to consumers.
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