Temu and Shein Face EU Scrutiny Over Content Rules Compliance

In this photo illustration, the Temu logo is displayed on a laptop in San Anselmo, California on February 26, 2024. (Justin Sullivan/Getty Images)

The European Commission has asked the two popular Chinese online retailers, Temu and Shein, to provide details by July 12 on how they meet the bloc’s content moderation obligations.

The Commission has sent formal requests to the two companies, asking them, among other things, how they protect minors and ensure that their online interfaces do not deceive or manipulate users, according to a statement issued on June 28.

The Commission will decide what to do next based on its assessment of the information provided by the two companies, the statement read, adding that it could initiate a formal investigation.

Confirmed violations of DSA can lead to fines that go up to 6 percent of their global turnover.

Both Chinese e-retailer giants are facing the “most stringent rules” under the Digital Services Act (DSA) after being added to the European Union’s list of “very large online platforms” earlier this year, according to a May 31 press release from the Commission.

The request is based on a complaint lodged by BEUC, which represents 44 consumer groups from 31 countries across Europe.

In a report released in May, BEUC accused Temu of failing to meet multiple rules under the DSA, such as providing consumers with the necessary information about traders operating on the platform and ensuring their products meet the EU’s standards.

The report said Temu employs “manipulative” techniques, such as “dark patterns” that subtly steer consumers into making decisions that may not align with their original intentions.

The report raised further concerns about the lack of transparency regarding how Temu recommends products to consumers, raising questions about the information the site used and the design of its algorithms.

“Consumers are therefore kept in the dark and may fall prey to manipulative practices by opaque recommender systems,” the report stated.

BEUC also accused the site of failing to provide sufficient protection to minors, noting that the platform’s game features and its products’ low prices are likely to be attractive to users under 18.

“Temu does not guarantee its users a safe, predictable, and trustworthy online environment, as the law requires,” BEUC said in a complaint summited to the Commission on May 16.

Meanwhile, 17 consumer groups from the BEUC networks also filed the same complaint against Temu in France, Spain, and other countries.

Asked about the BEUC complaints and the commission’s latest information request, Temu told The Epoch Times in a statement that the company is “cooperating fully” with the EU.

“We’d also like to reiterate that we are fully committed to complying with all applicable laws and regulations in the markets where we operate,” a spokesperson for the company said via email.

Workers producing garments at a textile factory that supplies clothes to fast fashion e-commerce company Shein in Guangzhou in southern China's Guangdong Province on June 11, 2024. (Jade Gao/ AFP  via Getty Images)

Shein confirmed to The Epoch Times that it had received the Commission’s request for information and said it was “working to promptly address it.”

“We share the Commission’s goal of ensuring that consumers in the EU can shop online with peace of mind, and we will continue working closely with the Commission to ensure our compliance with the Digital Services Act,” a spokesperson said in a statement.

Shein, a fast-fashion behemoth that relocated its headquarters from China to Singapore in 2010, entered the market in some European countries in the early 2010s.

In April, the EU executive declared Shein a very large online platform after the company said its site was visited by 108 million European users every month.

Under the DSA, platforms with over 45 million monthly European users must adopt more measures to protect minors and do more to address counterfeit products sold on their platforms.

Shein is now reportedly seeking an initial public offering in London after its efforts to debut on the public markets in New York drew the scrutiny of U.S. lawmakers.

Shein, as well as its rival Temu, has been accused of using forced labor in its cotton supply chains in China, which the two companies deny. Lawmakers also criticized the two Chinese retailers for taking advantage of a U.S. tax law exemption rule, known as the de minimis provision, by shipping thousands of small packages directly to U.S. customers.

Temu is the Western offshoot of Pingduoduo, one of the biggest online shopping platforms in China. By selling low-cost products made mostly in China, Temu has gained explosive growth since entering the European market in 2023. At the end of May, the EU executive designated it a very large online platform.

In the United States, the popular site has also come under fire, with Arkansas recently suing Temu over allegedly violating state privacy laws and engaging in deceptive trade practices.