Client safety teams across the European Union have filed coordinated complaints in opposition to Temu, accusing the Chinese language-owned extremely low-cost e-commerce platform of a raft of breaches associated to the bloc’s Digital Companies Act (DSA). Temu solely launched within the area a few yr in the past however not too long ago reported blasting previous 75 million month-to-month customers.
Penalties for confirmed breaches of the EU’s on-line governance and market security regime can attain as much as 6% of the worldwide annual turnover of the platform’s dad or mum. For some reference, Temu’s dad or mum Pinduoduo reported revenues of practically $35 billion for 2023, practically double on the yr prior; Temu was estimated to account for about 23% of that quantity final yr.
BEUC, the European client group that represents 45 regional client safety teams throughout 31 EU nations, stated Thursday it’s filed a criticism in opposition to Temu with the European Fee — calling for the EU to urgently designate it as a “very massive on-line platform” (VLOP) beneath the DSA. (VLOP-status would imply Temu has to adjust to further algorithmic transparency and accountability guidelines, together with mitigating systemic threat. Different e-commerce VLOPs embrace Alibaba, Amazon, Reserving.com, Google Purchasing and Zalando.)
On the identical time, 17 of BEUC’s member organizations across the bloc have filed DSA complaints with their nationwide client safety authorities — accusing Temu of breaching the regulation’s basic guidelines which have utilized to Temu since mid-February.
The coordinated complaints allege the e-commerce large is failing to fulfill a raft of DSA necessities, together with dealer traceability necessities; guidelines in opposition to manipulative design; and transparency round product recommender algorithms.
Commenting in a press release, Monique Goyens, director basic at BEUC, accused {the marketplace} of being “rife with manipulative strategies” designed to push customers to spend extra, and claimed inadequate details about merchants “often leav[es] customers at nighttime about who they’re buying merchandise from.”
“This lack of traceability prevents customers from taking an knowledgeable determination or to know if a product complies with EU security guidelines,” she added.
The buyer safety teams are additionally elevating considerations about minor security, stating the intense worth discounting and gamification options baked into Temu’s platform are prone to be enticing to youngsters.
“Temu doesn’t assure its customers a protected, predictable, and reliable on-line setting because the legislation requires,” they argue within the criticism. “Amongst different issues, we’ve sturdy considerations that buyers are falling prey to manipulative strategies, that Temu fails to make sure the traceability of the merchants working on its platform, or that its total functioning stays opaque, all of which breach the Digital Companies Act.”
“Finally, the excessive variety of harmful merchandise offered on Temu by untraceable merchants, by way of manipulative practices and opaque recommender techniques, are components of a poisonous cocktail prone to impair minors’ privateness, security, and safety,” the teams additionally warn.
The coordinated complaints comply with some particular person actions by client teams involved in regards to the security and legality of merchandise on the market on Temu’s market.
For instance, final fall, Italian client group Altroconsumo ran a check of cosmetics bought on the platform and located the overwhelming majority did not listing (or absolutely listing) components. Earlier this yr, the German client organisation vzbv raised considerations about deceptive product evaluations and worth reductions displayed on the platform.
As Temu isn’t at present a chosen VLOP, its oversight with the DSA’s basic guidelines falls to competent Digital Companies Coordinators in EU Member States the place its service operates. Eire’s media watchdog, the Coimisiún na Meán, is within the body as Temu opened an workplace in Dublin a yr in the past.
Nonetheless the criticism is prone to amp up strain on the EU to designate Temu as a VLOP. A Fee spokesperson advised us it’s conscious of Temu not too long ago reporting greater than 45 million month-to-month energetic customers within the EU — which is the edge for triggering VLOP standing — including: “We’re in touch with the platform in view of a doable designation sooner or later.”
Temu has been contacted for remark.
Final month Shein, one other Chinese language e-commerce large that’s been locked in a fierce rivalry with Temu — together with in relation to worldwide market growth — was designated by the EU as a DSA VLOP after reporting passing the 45M MAUs threshold.
Whereas, again in March, the EU opened its first DSA investigation on a market, focusing on one other China-owned ecommerce platform — Alibaba’s AliExpress — which had been named a VLOP within the first wave of designations in April final yr.
The Fee stated then that it suspects AliExpress of breaching DSA guidelines in areas linked to the administration and mitigation of dangers; content material moderation and its inside criticism dealing with mechanism; transparency of promoting and recommender techniques; traceability of merchants; and information entry for researchers. The investigation — one in every of a number of the EU has opened into VLOPs since final yr’s compliance deadline for these bigger platforms kicked in — stays ongoing.
