Temu Under EU Scrutiny Over Illegal Online Trade

EU Eyes Temu for Potential digital Law Violations

Brussels, Belgium – The European Commission has initiated a formal investigation into the popular online marketplace temu, examining potential breaches of EU digital law. While no definitive conclusions have been reached, the probe, led by Ursula von der Leyen, is scrutinizing several alleged infringements.

A company spokesman stated, “We will continue to work with the Commission without restrictions.” meanwhile, the Commission confirmed its focus on whether Temu violates EU legislation, including concerns about “addictive design features” employed on the platform.

This investigation follows an earlier inquiry launched in October by the Commission, which questioned Temu’s efforts to combat the sale of illegal products. At that time, the Commission highlighted instances where vendors previously removed from the platform reappeared.

Temu has rapidly gained notable traction among European consumers, becoming one of Germany’s largest online retailers. With millions of users across the EU, Temu qualifies as a Very Large Online Platform (VLOP) under EU digital regulations, having reported over 45 million monthly active users within the bloc.

Beyond the digital law examination, European consumer protection authorities have also raised concerns. In november, the Consumer Protection Cooperation (CPC) network identified several practices on Temu that potentially violate EU law. These include the use of misleading discounts,fake reviews,and insufficient or deceptive facts regarding consumer rights. the network also flagged difficulties in contacting the platform and the creation of a false sense of urgency for product availability.

The Commission’s scrutiny of Temu arrives amidst growing economic tensions between the EU and China. Recent EU-China summits have underscored the need for a more balanced economic relationship, highlighting ongoing trade disputes.

What steps is the EU taking to address concerns about illegal online trade on platforms like Temu?

The Rising Concerns Around Counterfeit Goods & Data Privacy

Temu, the rapidly growing online marketplace, is facing increasing scrutiny from European Union regulators regarding concerns over illegal online trade. While offering incredibly low prices and a vast product catalog, the platform is under investigation for potentially facilitating the sale of counterfeit goods, violating consumer protection laws, and raising data privacy issues.This increased attention comes as Temu aggressively expands its European footprint, recently launching in Spain and Italy with incentives like “zero commission” for sellers.

What are the Specific EU Concerns?

The EU’s concerns surrounding Temu are multifaceted. Here’s a breakdown of the key areas:

Counterfeit Products: A primary issue is the prevalence of counterfeit goods on the platform. Regulators are investigating whether Temu adequately vets its sellers and takes sufficient action against listings offering fake or infringing products.This impacts brand owners and consumers alike.

Product Safety Standards: EU regulations mandate strict safety standards for products sold within the bloc. Concerns exist that Temu sellers may not be adhering to these standards, potentially putting consumers at risk with unsafe toys, electronics, or other goods.

Data Privacy & GDPR Compliance: The EU’s General Data Protection Regulation (GDPR) is among the strictest in the world. Investigations are underway to determine if Temu is collecting and processing user data in a compliant manner,notably regarding data transfer outside the EU.

Lack of Transparency: Critics point to a lack of transparency regarding the origin of products and the identities of sellers on Temu. This makes it difficult to trace the source of counterfeit goods or hold sellers accountable for violations.

Unfair Competition: some argue that Temu’s aggressive pricing strategies, enabled by potentially lax oversight, create unfair competition for established European businesses that adhere to stricter regulations.

The Digital Services Act (DSA) and Temu

The EU’s Digital Services Act (DSA), which came into full effect in February 2024, plays a crucial role in the scrutiny of platforms like Temu. The DSA mandates that very large online platforms (VLOPs) and very large online search engines (VLOSEs) take greater responsibility for illegal content and products on their platforms.

Due Diligence Obligations: Temu,as a VLOP,is subject to stringent due diligence obligations under the DSA. This includes implementing measures to identify and remove illegal content, cooperating with authorities, and providing transparency reports.

Increased Enforcement: The DSA empowers the EU to impose meaningful fines – up to 6% of a company’s global annual revenue – for non-compliance. This provides a strong incentive for platforms like temu to address the concerns raised by regulators.

Reporting Mechanisms: The DSA also establishes mechanisms for users to report illegal content and for authorities to request details from platforms.

Temu’s Expansion into Europe: A Strategic Shift

Despite the scrutiny, Temu continues to expand aggressively within Europe. The platform’s recent launches in spain and Italy, coupled with incentives for sellers, demonstrate a strategic effort to gain market share. According to recent reports, Temu is actively courting European sellers, offering benefits such as:

Zero Commission: A significant draw for smaller businesses, eliminating the standard commission fees charged by other marketplaces.

Green Channel Review: Expedited product listing approval processes.

EU-Focused Infrastructure: Support for one-click product uploads to 27 EU sites.

This expansion suggests Temu views the European market as crucial to its long-term growth, even amidst regulatory challenges.

Impact on Sellers: Navigating the New landscape

The increased EU scrutiny has implications for sellers on Temu, particularly those based in Europe.

Increased Verification: Sellers can expect more rigorous verification processes to ensure compliance with EU regulations.

Product Compliance: Sellers are responsible for ensuring their products meet all relevant EU safety standards and labeling requirements.

Intellectual Property Rights: Sellers must respect intellectual property rights and avoid listing counterfeit or infringing products.

Data Protection: Sellers handling customer data must comply with GDPR regulations.

real-World Examples & Case Studies

While specific ongoing investigations are often confidential,several instances highlight the issues at play:

**Previous Counterfeit Crackdowns