European Union regulators accused Chinese online retailer Temu of failing to prevent the sale of illegal products on its platform, following a preliminary investigation under the bloc’s Digital Services Act. The law requires online marketplaces to take stronger actions to protect consumers and imposes steep fines for noncompliance. The European Commission’s inquiry found a high risk of consumers encountering illegal goods on Temu, including baby toys and small electronics, discovered during a “mystery shopping” exercise.
The Commission criticized Temu for using an inaccurate risk assessment approach based on general industry data rather than details specific to its marketplace, suggesting inadequate measures to stop rogue sellers of noncompliant products. Temu said it would cooperate fully with the investigation. The company, owned by China’s Pinduoduo Inc., has grown rapidly in the EU by offering inexpensive goods shipped from Chinese sellers and counts 92 million users there. Temu will have the opportunity to respond before the Commission issues a final ruling, with possible penalties including fines of up to 6% of annual global revenue and requirements to address the issues.