The European Commission has launched a formal investigation into Temu, a fast-growing online marketplace known for its low-cost offerings. Announced Thursday, the investigation will determine whether Temu has violated the Digital Services Act (DSA), with potential fines of up to 6% of annual global revenue if non-compliance is confirmed.
Regulators are scrutinizing several allegations, including Temu enabling rogue traders to return and continue selling non-compliant goods. Concerns also cover:
- The platform’s gamified rewards system and infinite scrolling features, which may negatively impact users’ mental well-being.
- The recommender system, which relies on profiling and may not meet DSA rules requiring an option for non-profiling-based recommendations.
- Data access for researchers, where the Commission doubts Temu’s compliance in providing publicly available data.
Heavy Penalties Hang Over Temu
The investigation is built on data provided by Digital Services Coordinators (DSCs) in Ireland and Germany, as well as customs and market surveillance bodies. This marks the first time the EU has acted on DSC-supplied information. Officials emphasize that the probe follows a sharp increase in user concerns since Temu’s launch in Europe last year.
Temu’s parent company, Pinduoduo, faces significant consequences if found non-compliant. Responding to the investigation, Temu stressed its commitment to DSA compliance, stating it continuously invests in consumer safety. The company also confirmed ongoing negotiations to join the EU’s Memorandum of Understanding on combating counterfeit goods.
Consumer advocacy groups have welcomed the Commission’s action. Fernando Hortal Foronda, digital policy officer at the European Consumer Organisation, said, “There are many problems consumer groups have identified with Temu, which include many dangerous or illegal products on sale or the frequent use of design techniques to trick consumers. This decision by the Commission is a promising step, but only the first.”
Meanwhile, U.S. regulators are monitoring the situation closely. In September, the Consumer Product Safety Commission (CPSC) flagged a potential investigation into Temu over dangerous product listings, including items that threaten infant safety.
European officials remain cautious, noting there’s no set timeline for DSA investigations. Outcomes could range from fines to voluntary remedies or case dismissals. Until then, Temu’s compliance efforts will be under rigorous scrutiny.
