Home / News / Temu is being accused of violating the European Union’s Digital Services Act (DSA) due to a collection of consumer complaints

Temu is being accused of violating the European Union’s Digital Services Act (DSA) due to a collection of consumer complaints

Temu, a Chinese-owned ultra-low-cost e-commerce platform, is facing coordinated complaints from consumer protection groups across the European Union. These complaints accuse Temu of multiple violations of the bloc’s Digital Services Act (DSA). Temu was introduced in the region approximately one year ago, but it has recently announced that it has surpassed 75 million monthly users.

The penalties for verified violations of the EU’s online governance and marketplace safety regulations can amount to as much as 6% of the platform’s parent company’s worldwide annual revenue. As a point of comparison, Temu’s parent company, Pinduoduo, generated approximately $35 billion in revenue in 2023, which is nearly twice as much as the previous year. It is estimated that Temu contributed around 23% of that total amount last year.

BEUC, the European consumer organization that represents 45 regional consumer protection groups across 31 EU countries, has lodged a formal complaint with the European Commission against Temu. The complaint urges the EU to promptly classify Temu as a “very large online platform” (VLOP) under the Digital Services Act (DSA). (VLOP-status would entail that Temu must adhere to supplementary regulations regarding algorithmic transparency and accountability, which includes addressing systemic risk.) Additional e-commerce VLOPs consist of Alibaba, Amazon, Booking.com, Google Shopping, and Zalando.

Simultaneously, 17 member organizations of BEUC across the European Union have lodged complaints regarding the Digital Services Act (DSA) with their respective national consumer protection authorities. These complaints allege that Temu has violated the DSA’s overarching regulations, which have been applicable to Temu since mid-February.

The collective complaints assert that the e-commerce giant is not fulfilling various obligations outlined in the DSA, such as the need for traders to be easily identifiable, the prohibition of manipulative design practices, and the necessity for transparency regarding product recommender algorithms.

In a statement, Monique Goyens, the director general at BEUC, criticized the marketplace for engaging in manipulative techniques that encourage consumers to spend more. She also highlighted the lack of adequate information about traders, which often leaves consumers unaware of the identity of the sellers from whom they are purchasing products.

“The absence of traceability hinders consumers from making informed decisions or determining if a product adheres to EU safety regulations,” she stated.

The consumer protection groups are expressing concerns regarding the safety of minors, highlighting the significant price reductions and gamification elements integrated into Temu’s platform, which are likely to appeal to children.

They contend in the complaint that Temu disobeys the law by failing to offer its users a safe, dependable, and trustworthy online environment. “We are particularly concerned about consumers being manipulated, the lack of traceability of traders on Temu’s platform, and the overall lack of transparency in its operations. These issues violate the Digital Services Act.”

The groups also caution that the large quantity of hazardous products being sold on Temu by unidentifiable traders using deceptive tactics and unclear recommender systems creates a harmful combination that is likely to compromise the privacy, safety, and security of minors.

The collective grievances stem from previous independent initiatives taken by consumer organizations that express apprehension regarding the safety and legality of products available for purchase on Temu’s online platform.

As an illustration, during the previous autumn, Altroconsumo, an Italian consumer group, conducted a test on cosmetics bought from the platform and discovered that the overwhelming majority of them did not include (or fully include) a list of ingredients. In a recent development, the German consumer organisation vzbv expressed apprehensions regarding deceptive product reviews and price reductions showcased on the platform.

Since Temu is not currently recognized as a designated VLOP (very large online platform), the responsibility for overseeing its compliance with the general rules of the DSA (Digital Services Act) lies with competent Digital Services Coordinators in EU Member States where Temu’s service is available. Ireland’s media regulatory body, the Coimisiún na Meán, is being considered as Temu established an office in Dublin one year ago.

Nevertheless, the complaint is expected to increase the pressure on the EU to officially classify Temu as a Very Large Ocean Predator (VLOP). A spokesperson from the Commission acknowledged that Temu has recently reported having over 45 million monthly active users in the EU, which meets the requirement for triggering Very Large Online Platform (VLOP) status. The Commission is currently communicating with Temu regarding the potential designation in the future.

Temu has been reached out to for a comment. The company has issued a statement acknowledging its status as a newcomer in the region. It states that it has been actively seeking feedback from customers, regulators, and consumer groups. Furthermore, the company claims to have been making necessary changes to its operations in order to meet the expectations of the local community. Temu recently entered into a “cease-and-desist declaration” with Germany’s vzbv, as stated. According to the statement, many of the issues raised by this authority are consistent with the BEUC’s complaint about its practices. Furthermore, it asserts a commitment to resolving the issues that have been brought to attention.

“We consider the BEUC complaint to be of utmost importance, and we will conduct a comprehensive analysis of it,” Temu also stated. “We aim to maintain an ongoing conversation with the appropriate parties involved in order to enhance the quality of Temu’s service for consumers.” When we find areas that need improvement, we are enthusiastic about collaborating to enhance our service and address any deficiencies. Our primary focus is on ensuring consumer satisfaction and delivering a secure and reliable service that is highly regarded and provides substantial benefits. We are dedicated to ensuring transparency and adhering fully to all relevant laws and regulations.

The European Union classified Shein, a Chinese e-commerce company that has been in fierce competition with Temu, particularly in terms of entering international markets, as a DSA VLOP in the previous month after it reported exceeding the threshold of 45 million monthly active users (MAUs).

In April of the previous year, the European Union initiated its initial investigation into a marketplace, specifically focusing on AliExpress, an e-commerce platform owned by Alibaba, which was previously designated as a Very Large Online Platform (VLOP).

The Commission previously stated its suspicion that AliExpress has violated DSA regulations in several areas, including risk management and mitigation, content moderation, internal complaint handling, transparency of advertising and recommender systems, traceability of traders, and data access for researchers. The ongoing investigation is one of several that the EU has initiated into VLOPs (Very Large Online Platforms) since the compliance deadline for these larger platforms was implemented last year.

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