The EU has launched formal proceedings against Chinese shopping website Temu amid concerns it is failing to stop the sale of illegal products online.
A formal investigation was opened on Thursday, with the European Commission citing concerns about the platform, which is a cut-price rival to Amazon.
With its slogan “shop like a billionaire”, the service has grown rapidly in the EU market since its launch in April last year, selling everything from cosmetics to clothing, furniture and technology, purchased directly in China to about 100 million users.
The European Commission said it had numerous concerns that the platform, owned by PDD Holdings, was violating the new Digital Services Act (DSA), which regulates technology companies ranging from Facebook to X and Google.
Among them is concern that it does not have strong enough systems to stop the re-emergence of “previously suspended rogue traders” with products that sometimes resurface within days of being removed.
A senior commission official said several authorities across Europe, particularly in Germany, Denmark and Ireland, where the company is based in the EU, had raised concerns about the sale of counterfeit products, pharmaceuticals, cosmetics and toys.
“We have received many contributions from other authorities, but there is a kind of current suspicion that not enough is being done, nor in an effective way, to really prevent the spread of illegal products,” they said.
The official added that they suspected that Temu had not implemented “effective management systems” to “review, monitor and examine what happens on its platform.”
The commission is also concerned about aggressive sales tactics on the platform with an “addictive design” involving “game-like rewards,” with weak systems to “mitigate the risks arising from such an addictive design.”
If found to be in breach of the DSA, the company could face large fines.
Margrethe Vestager, executive vice president in charge of the digital-friendly Europe portfolio at the commission, said: “We want to make sure Temu complies with the DSA. Especially to ensure that the products sold on their platform meet EU standards and do not harm consumers.
“Our app will ensure a level playing field and that every platform, including Temu, fully respects the laws that keep our European market safe and fair for everyone.”
Officials said Temu was “extremely responsive” to the EU investigation, responding “within minutes” to any questions.
Temu’s growth has been rapid, registering 75 million users in the EU in April and increasing to 92 million in September.
“I want to emphasize that these are suspicions at this time. “These are not conclusions, not even preliminary conclusions,” an official said.
They added that the investigation was designed to determine whether there was a “systemic” problem or not.
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A pan-European consumer group filed complaints against Temu which they said was violating the DSA by failing to provide customers with essential information about sellers on its platforms.
It filed its complaint in May, and 17 EU members, including France, Italy and the Netherlands, also filed complaints with the relevant national authorities.
In June, the commission sent formal requests for information to Temu and its Chinese rival, Shein, about their formal obligations to design online interfaces that strive to protect children and make transparent the origin of products for sale.
Fernando Hortal Foronda, head of digital policy at the European Consumer Organization (BEUC), which lodged one of the original complaints, welcomed the investigation. “There are many problems that consumer groups have identified with Temu, including many dangerous or illegal products for sale or the frequent use of design techniques to mislead consumers. “This decision by the commission is a promising step, but only the first,” he said.
Rocío Concha, of British consumer group Which?, praised the commission’s investigation but said there were barriers to taking such action in the UK, where similar concerns exist. “Weak consumer protection laws [in Britain] This means that Temu and other online marketplaces are not responsible for the sale of unsafe products by third parties,” he said.
“The government must use its product regulation and metrology bill give online marketplaces greater legal responsibility to prevent unsafe products from being sold on their platforms and allow for strict enforcement actions, including heavy fines, if they flout the rules.”
Temu said: “Temu takes its obligations under the DSA seriously and continually invests to strengthen our compliance system and safeguard the interests of consumers on our platform. “We will fully cooperate with regulators to support our shared goal of a safe and reliable market for consumers.”
He said he was required to sign a “memorandum of understanding on the sale of counterfeit goods on the Web,” a voluntary agreement facilitated by the commission.
“Counterfeiting is an industry-wide challenge and we believe collaborative efforts are essential to advance our shared goals of protecting consumers and rights holders,” a spokesperson said.
