Chinese online retailer Temu faces European Union investigation into
rogue traders and illegal goods
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[November 01, 2024] By
KELVIN CHAN
LONDON (AP) — Chinese online retailer Temu is facing a European Union
investigation over suspicions it's failing to prevent the sale of
illegal products, the 27-nation bloc's executive arm said on Thursday.
The European Commission opened its investigation five months after
adding Temu to the list of “very large online platforms” needing the
strictest level of scrutiny under the bloc's Digital Services Act. It's
a wide-ranging rulebook designed to clean up online platforms and keep
internet users safe, with the threat of hefty fines.
Temu started entering Western markets only in the past two years and has
grown in popularity by offering cheap goods - from clothing to home
products — that are shipped from sellers in China. The company, owned by
Pinduoduo Inc., a popular e-commerce site in China, now has 92 million
users in the EU.
Temu said it “takes its obligations under the DSA seriously,
continuously investing to strengthen our compliance system and safeguard
consumer interests on our platform.”
“We will cooperate fully with regulators to support our shared goal of a
safe, trusted marketplace for consumers,” the company said in a
statement.
European Commission Executive Vice-President Margrethe Vestager said in
a press release that Brussels wants to make sure products sold on Temu's
platform "meet EU standards and do not harm consumers."
EU enforcement will “guarantee a level playing field and that every
platform, including Temu, fully respects the laws that keep our European
market safe and fair for all,” she said.
The commission's investigation will look into whether Temu's systems are
doing enough to crack down on “rogue traders” selling “non-compliant
goods” amid concerns that they are able to swiftly reappear after being
suspended. The commission didn't single out specific illegal products
that were being sold on the platform.
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A page from the Temu website is shown in this photo, in New York,
Friday, June 23, 2023. (AP Photo/Richard Drew)
Regulators are also examining the
risks from Temu's “addictive design," including “game-like" reward
programs, and what the company is doing to mitigate those risks.
Also under investigation is Temu's compliance with two other DSA
requirements: giving researchers access to data and transparency on
recommender systems. Companies must be detail how they recommend
content and products, and give users at least one option to see
recommendations that are not based on their personal profile and
preferences.
Temu now has the chance to respond to the commission, which can
decide to impose a fine or drop the case if the company makes
changes or can prove that the suspicions aren't valid.
Brussels has been cracking down on tech companies since the DSA took
effect last year. It has also opened an investigation into another
e-commerce platform, AliExpress, as well as social media sites like
X and Tiktok, which bowed to pressure after the commission demanded
answers about a new rewards feature.
Temu has also faced scrutiny in the United States, where a
Congressional report last year accused the company of failing to
prevent goods made by forced labor from being sold on its platform.
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