Chinese E-Retailer Temu to be investigated by EU Tech Regulators over Sale of illegal Products – Fintech News Europe

BRUSSELS — Chinese online retailer Temu is under investigation by European Union regulators over potential breaches of the EU’s Digital Services Act (DSA), which seeks to prevent the sale of illegal products and safeguard consumers, officials announced Tuesday. If found in violation, Temu could face fines up to 6% of its global revenue.
The European Commission’s investigation will examine claims that Temu’s platform may be facilitating the sale of unlawful products, with inadequate mechanisms to address and prevent illegal content. Concerns also extend to the design of Temu’s platform, which includes game-like reward features that could contribute to addictive user behavior, as well as its recommendation algorithms which may promote excessive purchasing.
The investigation follows complaints by the pan-European consumer advocacy group BEUC and 17 of its national affiliates, who raised red flags about the platform’s compliance with EU standards. “There is real suspicion that not enough is done, in an effective way, to really prevent the dissemination of illegal products. Rogue traders are reappearing with different identities,” an EU official said.
Temu, a subsidiary of Chinese e-commerce giant PDD Holdings, has approximately 92 million users across the EU’s 27 member states. In response to the inquiry, the company affirmed its commitment to DSA compliance, stating, “Temu takes its obligations under the DSA seriously, continuously investing to strengthen our compliance system and safeguard consumer interests on our platform.”
The EU’s probe will also assess whether Temu is adhering to a DSA mandate that requires platforms to provide researchers access to publicly available data on the site. Additionally, Temu is reportedly in discussions to join a voluntary EU initiative aimed at curbing the sale of counterfeit goods online.
EU Antitrust and Technology Chief Margrethe Vestager emphasized the importance of compliance, stating, “We want to ensure that Temu is complying with the Digital Services Act, particularly in ensuring that products sold on their platform meet EU standards and do not harm consumers.”
This case marks the latest test of the DSA, which aims to hold major online platforms accountable for the safety and transparency of their services across the European market.
Source: Reuters