The European Commission has brought charges against the Chinese online market Temu for violating EU regulations by not taking significant action to prevent illegal merchandise from being sold on its market. The Commission investigations revealed that Temu is a high risk to European customers, particularly when pursuing the purchases of baby toys and small electronic products under legal requirements.
An essential component of the Commission’s concern originates from an investigation of mystery shopping. This showed that quite a number of products in Temu are not compliant with EU safety regulations. The investigation has also revealed that the own risk assessment made by Temu was not specific to its platform.
Instead, it acted on general industry statistics, and this is an unacceptable practice in the strict Digital Services Act (DSA) of the EU. Should they prove the findings, then Temu might be in big trouble.
The EU can impose a fine on the company up to 6% of the global annual revenue. It might also direct Temu to make efforts to correct the problems. Such penalties are among the initiatives of the EU under the DSA, a piece of legislation meant to put online platforms under more responsibility for what they sell and operate.
Temu has amended that it will cooperate fully with the Commission. Nevertheless, such is not the sole problem that the company has to deal with. The EU is also investigating whether Temu might employ addictive design elements; it does not have any transparency on the methods of its recommendations, and it gives researchers limited access to its data.
This case evinces the increasing pressure on mainstream online organizations to defend consumers and comply with EU regulations. The Digital Services Act will hold companies such as Temu accountable in Europe in terms of the content and products they provide. It is a strong signal that websites cannot afford to neglect safety regulations and create loose internal controls.
The investigation is already underway, so everyone’s attention will be focused on the manner in which Temu reacts to the situation and whether the findings by the EU will result in the imposition of fines or other measures. The result may leave a significant precedent among the different international forums that undertake business in Europe.
