EU cracks down on Temu over illegal product risks

The European Union has imposed a fine of €200 million ($232 million) on the Chinese e-commerce giant Temu for offering illegal products on its platform.

Temu "failed to diligently identify, analyse and assess the systemic risks of illegal products being offered on its platform and the resulting harm to consumers in the European Union," the European Commission said.

An investigation carried out by the commission, which included a mystery shopping exercise, concluded that many products failed safety tests, CE Report quotes MIA.

These include unsafe chargers and baby toys containing chemicals exceeding legal safety limits and posing suffocation hazards.

"Temu’s risk assessment underestimates concrete risks, lacks specificity, is not grounded in solid evidence, and is not comprehensive," said European Commission Vice-President Henna Virkkunen.

"It leaves regulators, users and the public in the dark about the true scale of potential harm posed by illegal products sold on Temu. Now it is time for Temu to comply with the law," she said.

The commission also claims that offers promoted by influencers "could amplify dissemination risks of illegal products."

The e-commerce platform has been active in Europe since 2023 and offers a wide range of products, from clothing to shoes and electronics, at extremely low prices. Its aggressive marketing strategies and rock-bottom prices have helped it expand and challenge established competitors such as Amazon.

Temu was given three months to present a plan to the commission on how to address the breaches.

Should it fail to comply with EU law in the future, the commission could ultimately impose period penalty payments in addition to the €200-million fine.

Under the EU's Digital Services Act (DSA), very large online platforms are subject to close scrutiny.

"Temu respects the objectives of the Digital Services Act and the need for clear, consistent rules across the digital economy. However, we disagree with the European Commission’s decision and consider the fine to be disproportionate," the company said in a statement.

"We will continue to engage with regulators in good faith and work toward a marketplace that serves consumers, businesses, and communities responsibly."

"We are reviewing the decision carefully and considering all available options," Temu said.

The company has the right to appeal the fine.

The commission is also investigating Temu's potentially addictive design, including game-like reward programmes, and the platform's transparency.

In addition, Temu's competitor Shein is being probed for the sale of illegal products including child sexual abuse material, the platform's potentially addictive design and the lack of transparency.

Thursday's fine is the second time the EU has imposed a financial penalty on an online company under the DSA since it was introduced in 2024.

Social media platform X was fined €120 million in December for transparency breaches.

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