Dive Brief:
- Temu didn’t properly assess the risk that illegal products might be sold on its marketplace, which means the platform is not in compliance with the European Union’s Digital Services Act, according to an EU Commission statement Monday.
- The Commission released preliminary findings from an ongoing investigation into the fast fashion giant, which found that Temu’s EU consumers are at high risk of encountering illegal products, including baby toys and small electronics that don’t comply with the trade bloc’s regulations.
- Last year, Temu was asked to provide detailed information on how it addresses potentially illegal products on its website. However the Commission said Temu’s response at the time was “inaccurate and relying on general industry information rather than on specific details about its own marketplace.”
Dive Insight:
The Commission is continuing the investigation, which also focuses on allegedly addictive design features and the lack of transparency in relation to Temu’s recommendation system. In addition, Temu is facing another EU probe, which focuses on alleged fake discounts, pressure selling and forced gamification.
Following the preliminary results, Temu can file a reply to the Commission in writing, per the release. If its findings are confirmed, Temu could face a penalty of up to 6% of its total annual global turnover, and it would have to take measures to address the breach. Temu could also face enhanced scrutiny to ensure future compliance, the Commission said.
“We will continue to cooperate fully with the Commission,” a Temu spokesperson said in an email to Fashion Dive.
Temu’s fast fashion rival Shein is also facing an ongoing EU investigation into its compliance with the Digital Services Act.
Since their respective launches, both Shein and Temu have faced various legal and regulatory challenges, including in the U.S. and Vietnam.
