The European Commission has accused Temu, a Chinese e-commerce platform, of breaking consumer protection provisions of the Digital Services Act (DSA) by failing to adequately monitor product safety and manage risk.
According to preliminary findings made public on Monday, the Commission claimed that Temu had failed to sufficiently evaluate or handle the risks associated with unlawful or non-compliant products on its platform, potentially endangering millions of European customers.
The investigation, which began in October 2024, discovered that Temu users are regularly exposed to dangerous products, particularly toys for kids and tiny electronics that don’t meet EU safety regulations.
The core of the Commission’s argument is Temu’s risk assessment from October 2024, which regulators found to be inadequate. Temu allegedly relied on generic industry information rather than platform-specific data, failing to recognise market-specific risks.
Risk of facing regulatory discipline
If the company is found to have violated the DSA, it could now be fined up to 6 percent of its yearly worldwide revenue.
“This may therefore have led to inadequate mitigation measures against the dissemination of illegal products,” the Commission said.
Since its implementation in 2023, the DSA has placed stringent obligations on digital platforms to uphold secure and open online spaces.
This includes aggressively combating the sale of phony or dangerous goods on online marketplaces such as Temu.
Even though the Commission’s conclusions are still preliminary, officials have issued a warning that if the violations are verified, there will be serious repercussions.
Right of reply
Temu will now have the opportunity to examine the Commission’s evidence and reply in writing.
Prior to making a final decision, the European Board for Digital Services will also be consulted.
“If the Commission’s preliminary views were to be ultimately confirmed, the Commission would adopt a non-compliance decision finding that Temu is in breach of Article 34 of the DSA.
“Such a decision could entail fines of up to 6 percent of the total worldwide annual turnover of the provider and order the provider to take measures to address the breach.”
“A non-compliance decision may also trigger an enhanced supervision period to ensure compliance with the measures the provider intends to take to remedy the breach,” the Commission stated.
Temu’s debut in Africa
Temu, the Chinese e-commerce giant, officially launched its operations in Nigeria last year, aiming to disrupt the local market with its direct-from-manufacturer model.
This entry follows its successful debut in South Africa and is part of a broader strategy to penetrate the African e-commerce landscape.
Temu, launched in 2022, is owned by PDD Holdings, the parent firm of Pinduoduo. Former Google employee Colin Huang created PDD Holdings to provide low-cost, supplier-direct items.
Temu, headquartered in Boston, has rapidly grown into over 30 markets using its Chinese heritage and supply chain skills. It premiered in SA in January 2024. The fact that its products are less than wholesale costs gives them an edge.