Temu continues to be a target in the European Union.
The EU’s Consumer Protection Cooperation (CPC) Network notified the e-commerce platform Thursday that it has infringed upon EU consumer laws, following an investigation of the company’s practices.
The watchdog alleged that Temu’s business model promotes practices that “may mislead consumers or unduly influence their purchasing decisions.”
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The allegations come just days after the European Commission announced it had launched a formal investigation into Temu over potential violations of the EU’s Digital Services Act (DSA), under which the low-priced goods purveyor must comply with the strictest rules due to its status as a Very Large Online Provider (VLOP). That investigation centers around the company’s potential sale of illegal goods, as well as its purported “addictive design.” According to the CPC Network, its findings complement the launch of the investigation around the DSA.
This time around, Temu has been accused of violating consumer laws. According to the Commission, Temu’s “problematic practices” include fake discounting, forced gamification, missing and misleading information, fake reviews and more.
The CPC Network found that Temu’s mechanisms for preventing fake reviews don’t go far enough; stated that it uses “false claims about limited supplies or false purchase deadlines” to convince consumers to purchase items; claimed that it gives consumers the illusion of a discount when no such deal exists; noted that it deceives consumers with “incomplete and incorrect information” over their rights on returns and refunds and more.
According to the CPC Network, it will continue to evaluate Temu’s compliance with obligations around information disclosure.
Věra Jourová, vice president for values and transparency, said that the EU Commission will continue pursuing actions for consumer protection, no matter the size or scope of the company in question.
“Ensuring safety of consumers in the EU is a priority for the Commission. Therefore, adherence to our consumer protection standards by the trading companies is non-negotiable. The dedication and coordinated efforts of national authorities play a vital role in ensuring a fair and secure market for everyone. We have shared today our concerns with Temu and we urge Temu to promptly bring its practices into full compliance with EU consumer protection rules,” Jourová said in a statement.
As a result of the alleged breaches of EU law, Temu will be required to submit more information to the relevant consumer protection regulators and to come up with a plan to fix its issues with consumer laws. It must do so within the next month, and if it fails to adequately address the Commission’s concerns, it could face fines and other forms of forced compliance from the bloc or its member states.
A spokesperson for the company said Temu “acknowledges the concerns raised by the European Commission and national consumer authorities” and plans to work with the Commission on compliance.
“Although we have gained popularity with many consumers in a relatively short time, we are still a very young platform— less than two years in the EU—and are actively learning and adapting to local requirements. We will fully cooperate with this investigation, as we believe that such scrutiny benefits consumers, merchants and the platform in the long term,” the spokesperson said.
The findings of this investigation—and the ongoing investigation into Temu’s compliance with the DSA—are not the only regulatory scrutiny the company currently faces. It was recently banned by the Indonesian government, which cited threats to both consumers and local business owners, and Germany has been considering new laws that would impact both Temu and its competitor, Shein.
Simultaneously, U.S. regulators have put both companies in the hot seat, issuing questions over their business practices and import policies. As President Joe Biden’s term comes to a close, those close to him have noted that he plans to take action on the U.S.’s de minimis exemption, which Shein and Temu use to ship items into the U.S. without tariffs or scrutiny. Germany has considered doing the same, and other countries, like South Africa, have already enacted change.
