The EU has launched formal proceedings towards the Chinese language buying web site Temu amid issues it’s failing to halt the sale of unlawful merchandise on-line.
A proper investigation was opened on Thursday with the European Fee citing issues over the platform, which is a cut-price rival to Amazon.
With its tagline “store like a billionaire”, the service has quickly grown within the EU market since its launch in April final 12 months, promoting every little thing from cosmetics to clothes in addition to furnishings and tech, sourced instantly in China to about 100 million customers.
The European Fee stated it had quite a few issues that the platform, owned by PDD Holdings, was breaching the brand new Digital Companies Act (DSA), which regulates tech companies starting from Fb to X and Google.
Amongst them are issues that it doesn’t have sufficiently strong techniques in place to cease the reappearance of “beforehand suspended rogue merchants” with merchandise re-emerging generally inside days of being eliminated.
A senior fee official stated issues in regards to the promoting of counterfeit merchandise, prescribed drugs, cosmetics and toys had been raised by numerous authorities throughout Europe, significantly in Germany, Denmark and Eire, the place the corporate is headquartered within the EU.
“Now we have obtained a variety of enter by different authorities, however there’s a actual form of suspicion that not sufficient is completed, not in an efficient means, to essentially forestall the dissemination of unlawful merchandise,” they stated.
The official added that they suspected Temu had not put “efficient management techniques” in place “reviewing and monitoring and screening what occurs on their platform”.
The fee can be involved in regards to the aggressive gross sales techniques on the platform with an “addictive design” involving “game-like rewards”, with weak techniques to “mitigate the dangers stemming from such addictive design”.
If discovered to be in breach of the DSA the corporate may face giant fines.
Margrethe Vestager, the chief vice-president answerable for the Europe match for the digital age portfolio on the fee, stated: “We need to be certain that Temu is complying with the DSA. Significantly in making certain that merchandise bought on their platform meet EU requirements and don’t hurt customers.
“Our enforcement will assure a degree taking part in subject and that each platform, together with Temu, absolutely respects the legal guidelines that preserve our European market protected and truthful for all.”
Officers stated Temu was “extraordinarily responsive” to the EU probe, responding “inside minutes” to any questions.
Temu’s development has been speedy, registering 75 million customers within the EU in April, rising to 92 million in September.
“I need to stress that these are suspicions at this stage. These will not be conclusions, not even preliminary conclusions,” stated an official.
They added that the investigation was designed to seek out out whether or not there was a “systemic” concern or not.
Complaints have been levelled towards Temu by a pan-European shopper group that stated it was breaching the DSA by failing to offer prospects with essential details about the sellers on its platforms.
It filed its grievance in Could, with 17 EU members together with France, Italy and the Netherlands additionally submitting complaints to related nationwide authorities.
In June the fee despatched formal requests for info to Temu and its Chinese language rival, Shein, concerning their formal obligations to design on-line interfaces that strived to guard youngsters and make the supply of the products on sale clear.
Fernando Hortal Foronda, digital coverage officer on the European Shopper Organisation (BEUC) which raised one of many authentic complaints, welcomed the investigation. “There are lots of issues shopper teams have recognized with Temu, which embrace many harmful or unlawful merchandise on sale or the frequent use of design methods to trick customers. This determination by the fee is a promising step, however solely the primary,” he stated.
Rocio Concha, of the British shopper group Which?, praised the fee’s investigation, however stated there have been limitations to taking such motion within the UK the place there are comparable issues. “Weak shopper safety legal guidelines [in Britain] imply Temu and different on-line marketplaces will not be held answerable for unsafe merchandise being bought by third events,” she stated.
“The federal government should use its product regulation and metrology invoice to provide on-line marketplaces larger obligation for stopping unsafe merchandise from being bought on their platforms and to allow powerful enforcement motion, together with heavy fines, in the event that they flout the principles.”
Temu stated: “Temu takes its obligations below the DSA significantly, constantly investing to strengthen our compliance system and safeguard shopper pursuits on our platform. We’ll cooperate absolutely with regulators to assist our shared objective of a protected, trusted market for customers.”
It stated it was attributable to signal a “memorandum of understanding on the sale of counterfeit items on the web”, a voluntary settlement facilitated by the fee.
“Counterfeiting is an industry-wide problem, and we consider that collaborative efforts are important to advancing our shared objectives of defending customers and rights holders,” a spokesperson stated.
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