Consumer protection groups across the European Union have filed coordinated complaints against Temu, accusing the Chinese-owned ultra-low-cost e-commerce platform of a series of violations related to the bloc’s Digital Services Act (DSA). Temu was launched in the region about a year ago, but recently reported exceeding 75 million monthly users.
Penalties for confirmed breaches of the EU online governance and market security regime can reach up to 6% of the parent platform’s global annual turnover. For some reference, Temu’s father, Pinduoduo reported revenue of nearly $35 billion by 2023, nearly double the previous year; Temu was My dear It represents about 23% of that amount last year.
BEUC, the European consumer organization representing 45 regional consumer protection groups in 31 EU countries, said on Thursday it had filed a complaint against Temu with the European Commission, calling on the EU to urgently designate it as a “platform very large online” (VLOP). under the DSA. (VLOP status would mean Temu has to comply with additional algorithmic transparency and accountability rules, including systemic risk mitigation. Other e-commerce VLOPs include Alibaba, Amazon, Booking.com, Google Shopping and Zalando.)
At the same time, 17 of BEUC’s member organizations across the bloc have filed complaints about the DSA with their national consumer protection authorities, accusing Temu of violating the general rules of the regulation that apply to Temu from mid-February.
The coordinated complaints allege that the e-commerce giant is failing to comply with a number of DSA requirements, including merchant traceability requirements; rules against manipulative design; and transparency around product recommendation algorithms.
In a statement, Monique Goyens, director general of BEUC, accused the market of being “riddled with manipulation techniques” designed to push consumers to spend more, and said there was not enough information about traders who “frequently abandon the market “.[es] “Consumers don’t know who they buy products from.”
“This lack of traceability prevents consumers from making an informed decision or knowing whether a product meets EU safety standards,” he added.
Consumer protection groups are also raising concerns about the safety of minors, noting that the extreme price discounts and gamification features built into Temu’s platform are likely to appeal to children.
“Temu does not guarantee its users a safe, predictable and reliable online environment as required by law,” they argue in the complaint. “Among other things, we are very concerned that consumers are victims of manipulation techniques, that Temu does not guarantee the traceability of merchants operating on its platform or that its general operation remains opaque, all of which violate the Digital Services Law. . “
“Ultimately, the high number of dangerous products sold on Temu by untraceable merchants, through manipulative practices and opaque recommendation systems, are ingredients in a toxic cocktail that will likely harm the privacy and safety of minors,” they also warn. the groups.
The coordinated complaints follow some individual actions by consumer groups concerned about the safety and legality of products on sale at Temu market.
For example, last fall, Italian consumer group Altroconsumo conducted a test of cosmetics purchased on the platform and found that the vast majority did not list (or completely listed) ingredients. Earlier this year, German consumer organization vzbv raised concerns about misleading product reviews and price discounts displayed on the platform.
As Temu is not currently a designated VLOP, its oversight of the general DSA rules falls to the competent Digital Service Coordinators in the EU Member States where its service operates. Ireland’s media watchdog, the Coimisiún na Meán, is in the frame as Temu opened an office in Dublin a year ago.
However, the complaint is likely to increase pressure on the EU to designate Temu as a VLOP. A Commission spokesperson has told us that he is aware of Temu recently reporting more than 45 million monthly active users in the EU, which is the threshold to activate VLOP status, adding: “We are in contact with the platform in view of a possible designation in the future.”
Temu has been contacted for comment. Update: The company sent a statement, describing itself as a “newcomer” to the region and saying it has been receiving feedback from customers, regulators and consumer groups; and also claims to have been adjusting the way it operates to align with local expectations. The statement reveals that last week Temu signed a “cease and desist statement” with Germany’s vzbv. It suggests that many of this authority’s concerns overlap with the BEUC’s complaint about its practices, adding that it is committed to addressing the issues raised.
“With regard to the BEUC complaint, we take it very seriously and will study it thoroughly,” Temu also wrote. “We look forward to continuing our dialogue with relevant stakeholders to improve Temu’s service to consumers. When we identify areas for improvement, we look forward to working together to improve our service and rectify any deficiencies. We care about the interest of consumers and strive to provide a safe and reliable service that is valued by consumers and adds significant value. “We are committed to transparency and full compliance with all applicable laws and regulations.”
Last month Shein, another Chinese e-commerce giant that has been locked in a fierce rivalry with Temu – including in relation to international market expansion – was designated by the EU as a DSA VLOP after reporting that it exceeded the 45 million MAU threshold.
While, in MarchThe EU opened its first DSA investigation into a market, targeting another Chinese-owned e-commerce platform, Alibaba’s AliExpress, which had been named a VLOP in the first wave of designations in April of last year.
The Commission then said that it suspects that AliExpress violates DSA rules in areas linked to risk management and mitigation; content moderation and its internal complaint handling mechanism; transparency of advertising and recommendation systems; merchant traceability; and data access for researchers. The investigation, one of several that the EU has opened into VLOPs since last year’s compliance deadline The rollout of these larger platforms continues.