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Temu accused of violating EU DSA in series of consumer complaints

European Union consumer protection groups have filed coordinated complaints against Temu, accusing the Chinese-owned ultra-low-cost e-commerce platform of a series of violations related to the Digital Services Act (DSA) of the block. Temu only launched in the region about a year ago, but recently announced that it had surpassed 75 million monthly users.

Sanctions for confirmed violations of the EU’s e-governance and market security regime can reach up to 6% of the platform’s parent company’s global annual turnover. For reference, Temu’s parent company Pinduoduo reported revenue of nearly $35 billion for 2023, almost double the previous year; Temu is estimated to have accounted for around 23% of that amount last year.

BEUC, the European consumer organization which represents 45 regional consumer protection groups in 31 EU countries, said on Thursday it had filed a complaint against Temu with the European Commission – calling on the EU to designate her emergency as a “very large online platform” (VLOP). under the DSA. (VLOP status would mean Temu must comply with additional algorithmic rules for transparency and accountability, including mitigating systemic risk. Other e-commerce VLOPs include Alibaba, Amazon, Booking.com, Google Shopping and Zalando.)

At the same time, 17 of BEUC’s member organizations across the bloc have filed DSA complaints with their national consumer protection authorities, accusing Temu of breaching the general rules of the regulation that have applied to Temu since mid -FEBRUARY.

The coordinated complaints allege that the e-commerce giant is failing to comply with a series of DSA requirements, including merchant traceability requirements; rules against manipulative design; and transparency around product recommendation algorithms.

In a statement, Monique Goyens, director general of BEUC, accused the market of being “riddled with manipulation techniques” designed to push consumers to spend more, and said insufficient information about merchants “often leaves consumers in ignorance as to whom.” they buy products they buy from.

“This lack of traceability prevents consumers from making an informed decision or knowing whether a product complies with EU safety rules,” she added.

Consumer protection groups also express concerns about the safety of minors, pointing out that the extreme price reductions and gamification features built into Temu’s platform are likely to be attractive to children.

“Temu fails to provide its users with a safe, predictable, and trustworthy online environment as required by law,” they claim in the complaint. “Among other things, we are seriously concerned that consumers may fall prey to manipulation techniques, that Temu fails to ensure the traceability of merchants operating on its platform or that its overall operation remains opaque, which constitutes a violation of the digital services law. »

“Ultimately, the high number of dangerous products sold on Temu by untraceable merchants, through manipulative practices and opaque recommendation systems, are the ingredients of a toxic cocktail that can undermine privacy and security. the safety of minors,” the groups also warn.

The coordinated complaints follow some individual actions by consumer groups concerned about the safety and legality of products on sale at Temu Market.

For example, last fall, Italian consumer group Altroconsumo conducted a test on cosmetic products purchased on the platform and found that the vast majority of them failed to list (or completely list) ingredients . Earlier this year, German consumer organization vzbv raised concerns about misleading product reviews and price reductions displayed on the platform.

As Temu is not currently a designated VLOP, its oversight of the general DSA rules falls to the relevant digital service coordinators in the EU member states where its service operates. Ireland’s media watchdog, Coimisiún na Meán, is part of Temu’s opening of an office in Dublin a year ago.

However, the complaint is likely to intensify pressure on the EU to designate Temu as a VLOP. A Commission spokesperson told us they were aware that Temu had recently reported more than 45 million monthly active users in the EU – which is the threshold to trigger VLOP status – adding: “We are in contact with the platform with a view to possible designation in the future. .”

Temu has been contacted for comment.

Last month, Shein, another Chinese e-commerce giant engaged in a fierce rivalry with Temu – particularly over international market expansion – was designated by the EU as a DSA VLOP after reporting that it had exceeded the threshold of 45 million MAU.

Last March, the EU opened its first DSA investigation into a market, targeting another Chinese-owned e-commerce platform – Alibaba’s AliExpress – which had been named VLOP in the first wave of designations in April of the ‘last year.

The Commission then said it suspected AliExpress of violating DSA rules in areas related to risk management and mitigation; content moderation and its internal complaints handling mechanism; transparency of advertising and recommendation systems; traceability of traders; and access to data for researchers. The investigation – one of several opened by the EU into VLOPs since last year’s compliance deadline for these large platforms came into effect – is still ongoing.

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