Client safety teams across the European Union have filed coordinated complaints in opposition to Temu, accusing the Chinese language-owned extremely low-cost e-commerce platform of a raft of breaches associated to the bloc’s Digital Companies Act (DSA). Temu solely launched within the area a couple of yr in the past however recently reported blasting previous 75 million month-to-month customers.
Penalties for confirmed breaches of the EU’s on-line governance and market security regime can attain as much as 6% of the worldwide annual turnover of the platform’s guardian. For some reference, Temu’s guardian Pinduoduo reported revenues of almost $35 billion for 2023, almost double on the yr prior; Temu was estimated to account for about 23% of that quantity final yr.
BEUC, the European client group that represents 45 regional client safety teams throughout 31 EU international locations, stated Thursday it’s filed a grievance in opposition to Temu with the European Fee — calling for the EU to urgently designate it as a “very massive on-line platform” (VLOP) below the DSA. (VLOP-status would imply Temu has to adjust to extra algorithmic transparency and accountability guidelines, together with mitigating systemic danger. Different e-commerce VLOPs include Alibaba, Amazon, Reserving.com, Google Purchasing and Zalando.)
On the identical time, 17 of BEUC’s member organizations across the bloc have filed DSA complaints with their nationwide client safety authorities — accusing Temu of breaching the regulation’s general rules which have applied to Temu since mid-February.
The coordinated complaints allege the e-commerce large is failing to satisfy a raft of DSA necessities, together with dealer traceability necessities; guidelines in opposition to manipulative design; and transparency round product recommender algorithms.
Commenting in an announcement, Monique Goyens, director normal at BEUC, accused {the marketplace} of being “rife with manipulative methods” designed to push customers to spend extra, and claimed inadequate details about merchants “steadily leav[es] customers in the dead of night about who they’re buying merchandise from.”
“This lack of traceability prevents customers from taking an knowledgeable resolution or to know if a product complies with EU security guidelines,” she added.
The buyer safety teams are additionally elevating considerations about minor security, declaring the acute worth discounting and gamification options baked into Temu’s platform are more likely to be enticing to kids.
“Temu doesn’t assure its customers a protected, predictable, and reliable on-line surroundings because the regulation requires,” they argue within the grievance. “Amongst different issues, we’ve got sturdy considerations that buyers are falling prey to manipulative methods, that Temu fails to make sure the traceability of the merchants working on its platform, or that its total functioning stays opaque, all of which breach the Digital Companies Act.”
“In the end, the excessive variety of harmful merchandise bought on Temu by untraceable merchants, via manipulative practices and opaque recommender programs, are components of a poisonous cocktail more likely to impair minors’ privateness, security, and safety,” the teams additionally warn.
The coordinated complaints comply with some particular person actions by client teams involved concerning the security and legality of merchandise on the market on Temu’s market.
For instance, final fall, Italian client group Altroconsumo ran a check of cosmetics bought on the platform and located the overwhelming majority did not listing (or absolutely listing) components. Earlier this yr, the German client organisation vzbv raised considerations about deceptive product evaluations and worth reductions displayed on the platform.
As Temu isn’t at present a chosen VLOP, its oversight with the DSA’s normal guidelines falls to competent Digital Companies Coordinators in EU Member States the place its service operates. Eire’s media watchdog, the Coimisiún na Meán, is within the body as Temu opened an office in Dublin a year ago.
Nonetheless the grievance is more likely to amp up stress on the EU to designate Temu as a VLOP. A Fee spokesperson informed us it’s conscious of Temu recently reporting greater than 45 million month-to-month lively customers within the EU — which is the brink for triggering VLOP standing — including: “We’re involved with the platform in view of a potential designation sooner or later.”
Temu has been contacted for remark. Replace: The corporate despatched an announcement, describing itself as a “newcomer” to the area and saying it’s been taking suggestions from prospects, regulators and client teams; and likewise claiming to have been adjusting the way it operates to align with native expectations. The assertion reveals that previously week Temu entered right into a “cease-and-desist declaration” with Germany’s vzbv. It suggests a lot of this authority’s considerations overlap with the BEUC’s grievance about its practices, including that it’s dedicated to addressing the problems raised.
“Relating to the BEUC grievance, we take it very severely and can examine it completely,” Temu additionally wrote. “We hope to proceed our dialogue with the related stakeholders to enhance Temu’s service for customers. The place we determine areas for enchancment, we’re desperate to work collectively to reinforce our service and to rectify any shortcomings. We maintain the curiosity of customers at coronary heart and try to offer a protected and trusted service that’s valued by customers and provides important worth. We’re dedicated to transparency and full compliance with all relevant legal guidelines and rules.”
Last month Shein, one other Chinese language e-commerce large that’s been locked in a fierce rivalry with Temu — together with in relation to worldwide market growth — was designated by the EU as a DSA VLOP after reporting passing the 45M MAUs threshold.
Whereas, back in March, the EU opened its first DSA investigation on a market, concentrating on one other China-owned ecommerce platform — Alibaba’s AliExpress — which had been named a VLOP within the first wave of designations in April last year.
The Fee stated then that it suspects AliExpress of breaching DSA guidelines in areas linked to the administration and mitigation of dangers; content material moderation and its inside grievance dealing with mechanism; transparency of promoting and recommender programs; traceability of merchants; and knowledge entry for researchers. The investigation — certainly one of a number of the EU has opened into VLOPs since last year’s compliance deadline for these bigger platforms kicked in — stays ongoing.
