Severe penalties threatened: EU tightens reins on cheap retailer Temu

Severe penalties are threatened
EU tightens reins on low-cost retailer Temu

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Temu has been criticized for using manipulative techniques on its online marketplace to rip off consumers. The EU Commission is taking a closer look at the Chinese online retailer. The penalties for violating EU regulations would hit Temu hard in the future.

The EU Commission is also tightening the regulations for the Chinese online retailer Temu. It officially classified Temu as a very large online platform under the Digital Services Act (DSA). Temu says it has around 75 million users per month in the EU.

The online platform is thus well above the threshold of 45 million users at which the DSA takes effect. Temu must now take extensive precautions within four months, i.e. by the end of September, to protect against, for example, product counterfeiting and violations of intellectual property rights. Annual risk assessment reports will also be mandatory, which must examine in particular possible adverse effects on the health and safety of consumers – with a focus on the physical and mental well-being of minors.

Temu lures customers with extreme bargains, but is repeatedly criticized for poor quality, unreceived shipments and, last but not least, the catastrophic climate and environmental impact of its products.

Consumer protection groups in several European countries filed a complaint against the platform in mid-May. The online marketplace is “full of manipulative techniques aimed at getting consumers to spend more on the platform.” Anyone who wants to delete their Temu account has to go through an “obstacle course” on the website. In addition, Temu often leaves consumers in the dark about who they are buying their products from.

Fines of up to six percent of annual turnover

With the Commission’s decision, the DSA’s requirements for digital giants apply to 24 large online services, including the online retailers Amazon and Zalando, services such as Google Maps and platforms such as Facebook, Tiktok and X. Only at the end of April did Brussels classify the Chinese online retailer Shein as a very large online platform.

If companies violate the regulations, the fines can reach up to six percent of their annual global turnover. In the event of repeated violations, they can also be banned in the EU, according to the DSA.

A Temu spokesperson said on Friday that the company had “taken note” of the classification and that Temu was committed to “complying with the rules and regulations of the DSA to ensure the security, transparency and protection of our users in the European Union.”

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