Consumer protection groups across the EU have lodged coordinated complaints against Temu, accusing the Chinese ultra-low-cost e-commerce platform of a series of breaches related to the EU’s Digital Services Act (DSA). Temu only launched in the region about a year ago, but recently reported that it had topped 75 million monthly users.
Penalties for confirmed violations of the EU’s online governance and market security regime can reach up to 6% of the platform’s parent company’s global annual turnover. For reference, Temu’s parent company Pinduoduo reported 2023 revenue of nearly $35 billion, nearly double the previous year; Temu is estimated to have accounted for about 23% of that amount last year.
BEUC, the European consumer organization representing 45 regional consumer protection organizations in 31 EU countries, said on Thursday that it had filed a complaint against Temu with the European Commission, calling on the EU to urgently designate it as a “very large online platform” (VLOP) based on DSA. (VLOP status means Temu must comply with additional algorithmic transparency and accountability rules, including mitigating systemic risks. Other e-commerce VLOPs include Alibaba, Amazon, Booking.com, Google Shopping and Zalando.)
Meanwhile, the group’s 17 BEUC member organizations have lodged a DSA complaint with their national consumer protection agency, accusing Temu of breaching the general rules of regulation that have been applicable to Temu since mid-February.
The coordinated complaint alleges that the e-commerce giant failed to meet a range of DSA requirements, including trader traceability requirements; rules against manipulative design; and transparency in its product recommendation algorithms.
BEUC director general Monique Goyens commented in a statement that the market was “riddled with manipulative techniques designed to push consumers to spend more”, claiming that insufficient information about traders “often leaves “.[es] Consumers have no idea who they are buying products from.
“The lack of traceability prevents consumers from making informed decisions or knowing whether a product complies with EU safety rules,” she added.
Consumer protection groups have also expressed concerns about the safety of minors, pointing out that extreme price discounts and gamification features in the Temu platform may be attractive to children.
“Temu has failed to ensure that users have a safe, predictable and trustworthy online environment as required by law,” they argued in the complaint. “In addition, we are deeply concerned that consumers are falling prey to manipulated technology that Temu cannot ensure.” The traceability of traders operating on its platform, or the fact that its overall functionality remains opaque, all violate the Digital Services Act.
The groups also warned: “Ultimately, the vast number of dangerous products sold on Temu by untraceable merchants through manipulative practices and opaque recommendation systems are ingredients in a toxic cocktail that could compromise the privacy, safety and security of minors.”
The coordinated complaints follow a number of individual actions taken by consumer groups concerned about the safety and legality of products sold on Temu markets.
Last fall, for example, Italian consumer group Altroconsumo tested cosmetics purchased on the platform and found that the vast majority did not list ingredients (or list them at all). Earlier this year, German consumer group 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 DSA General Rules rests with the competent Digital Services Coordinator in the EU Member States in which its services operate. Temu opened a Dublin office a year ago, bringing Irish media regulator Coimisiún na Mean on board.
However, the complaint is likely to increase pressure on the EU to designate Temu as a VLOP. A Commission spokesman told CNN it was aware that Temu had recently reported over 45 million monthly active users in the EU – the threshold that triggers VLOP status – adding: “We are liaising with the platform in light of the potential for future designation”.
Temu has been contacted for comment. renew: The company issued a statement describing itself as a “newcomer” to the region and said it had been listening to feedback from customers, regulators and consumer groups; and claimed it had been adjusting its operations to align with local expectations. The statement showed that Temu signed a “cease and desist statement” with Germany’s vzbv in the past week. It stated that many of the agency’s concerns overlapped with BEUC’s complaints about its practices, adding that it was committed to addressing the issues raised.
“We take complaints about BEUC very seriously and will conduct a thorough study,” Temu also wrote. “We hope to continue our dialogue with relevant stakeholders to improve Temu’s service to consumers. When we identify areas for improvement, we are keen to work together to enhance our service and rectify any shortcomings. We will benefit consumers We are committed to transparency and full compliance with all applicable laws and regulations.
Last month, Shein, another Chinese e-commerce giant that is locked in fierce competition with Temu, including in international market expansion, was designated a DSA VLOP by the EU after reporting that it exceeded the 45 million monthly active user threshold.
Meanwhile, back in March, the EU launched its first DSA investigation into a market, targeting another Chinese e-commerce platform – Alibaba’s AliExpress – which was included in the first wave of designations last April. Named VLOP.
The European Commission said at the time that it suspected AliExpress of violating DSA rules in areas related to risk management and mitigation; content moderation and its internal complaints handling mechanism; transparency of advertising and recommendation systems; traceability of traders; and researchers Data access. The investigation is one of several the EU has launched into VLOPs since compliance deadlines for these large platforms began last year, and is still ongoing.
