Temu accused by EU of breaking rules with illegal product sales

The European Union ramped up an investigation into Chinese-owned e-commerce firm Temu, saying that the company fails to gauge how many illegal products are sold through its platform.

The EU’s executive branch, the European Commission, preliminarily found Temu in breach of the bloc’s online content rule book, it said in a statement on Monday. It added that a risk assessment of illegal sales Temu conducted in October was inaccurate and that the commission’s own analysis and test purchases showed users in the EU are at high risk of receiving unsafe or counterfeit products such as baby toys or electronics.

“In our preliminary view, Temu is far from assessing risks for its users at the standards required by the Digital Services Act,” the EU’s digital chief Henna Virkkunen said in a press release. “Consumers’ safety online is not negotiable in the EU.”

The commission started its probe of Temu last year under the DSA, a sweeping regulation aimed at cracking down on illegal and harmful content online. Temu, a unit of Chinese-run PDD Holdings, was presented with a charge sheet including using addictive design to keep customers shopping and failing to stop the sale of illegal goods.

A separate investigation under EU consumer protection law is looking into what the commission deemed “problematic practices” such as fake discounts and fake reviews.

Temu will now have the right to defend itself from the findings or make commitments to address the commission’s grievances. Failing that, it might face fines that under the DSA can reach as much as 6 per cent of its annual global sales.