Temu could be fined by the EU for digital service violations
The EU says Temu hasn’t done enough to stop 'illegal products' from being sold on its marketplace.
Temu’s growth has been nothing short of wild. Despite being just three years old, the Chinese-owned online shopping app has exploded globally, going from zero to 100 million users in under a year, according to MobiLoud. That’s a rare feat in the e-commerce space, and with its pocket-friendly prices and free shipping model, it’s easy to see why shoppers flocked to it.
But, as with any platform expanding at warp speed, there’s often a catch. Now, the European Union says it’s found one. This week, the European Commission revealed that Temu may have violated the Digital Services Act (DSA), a major piece of legislation that requires large platforms to assess and reduce risks like the sale of 'illegal goods' and protect users through proper moderation and safety measures.
The EU says Temu hasn’t done enough to stop 'illegal products' from being sold on its marketplace. Things like baby toys and small electronics that don’t meet EU safety standards were easily found in a mystery shopping test, suggesting the platform’s product controls aren’t cutting it.
Louis Eriakha
Temu’s October 2024 risk assessment was also flagged. Regulators called it “inaccurate,” pointing out that instead of looking at its own data, Temu leaned on vague industry information. That’s a big no-no under the DSA, which requires platforms to assess their risks based on their specific operations and take active steps to reduce harm.
If the Commission’s findings hold up, Temu could be on the hook for a fine of up to 6% of its global annual revenue. To put that in perspective, Cross Border Magazine reports that the company racked up $70.8 billion in gross merchandise value in 2024, so the fine could be up to $4.2 billion. That kind of fine would sting. Temu can still defend itself by responding in writing, but the EU is making it clear: platforms that don’t take user safety seriously will face serious consequences.
And it’s not just Temu feeling the heat. Earlier this month, rival fast-fashion app SHEIN was fined €40 million in France for misleading business practices. Both companies are now under intense EU scrutiny, as regulators try to rein in what they see as harmful practices in the ultra-fast fashion and bargain shopping space.
As Temu continues to climb in popularity, its biggest challenge might not be attracting more users, but proving it can grow responsibly while playing by the rules.
Louis Eriakha
