Temu Faces EU Probe Into Rogue Traders, Illegal Goods

Chinese e-commerce site Temu faces an investigation into concerns that it fails to stop the sale of illegal products, plus a range of others concerns, the European Union’s executive said on Thursday.

The European Commission announced the probe on Thursday months after adding Temu to a list of large online platforms that require the strictest level of scrutiny under the bloc’s Digital Services Act (DSA).

Temu, which is owned by Pinduoduo, has become popular in many countries in recent years for cheap clothing and home products that are shipped from sellers in China.

ALSO SEE: Asian Economies at Risk From Inaction on Climate Change: ADB

But the site, which has more than 90 million users in Europe, has also been plagued by a series of concerns, ranging from its treatment of suppliers to the features of its app, which critics in the US have likened to “spyware“.

The EC said it had “opened formal proceedings to assess whether Temu may have breached the Digital Services Act in areas linked to the sale of illegal products, the potentially addictive design of the service, the systems used to recommend purchases to users, as well as data access for researchers.”

‘Rogue traders’, ‘addictive design’

The Commission said it had information sent by national authorities and third parties. It listed several areas of concern:

“The systems Temu has in place to limit the sale of non-compliant products in the European Union. Among others, it concerns systems designed to limit the reappearance of previously suspended rogue traders, known to have been selling non-compliant products in the past, as well as systems to limit the reappearance of non-compliant goods.”

EC regulators are also assessing risks from Temu’s “addictive design,” because it has “game-like” reward programmes, and wants to know what the company is doing to mitigate such risks, because they “could have negative consequences to a person’s physical and mental well-being.”

And thirdly, it wants to know how the company’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 said later that 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.

EC 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.