Temu is running afoul of the European Union’s Digital Services Act, according to complaints lodged by an EU consumer interest-focused organization. In the complaint that it filed with the European Commission on Thursday, Bureau Européen des Unions de Consommateurs (“BEUC”) claims that “booming Chinese online marketplace” Temu is “failing to protect consumers” – including upwards of 75 million monthly users in the EU – and “using manipulative practices that are illegal” under the Digital Services Act (“DSA”), which aims to counter the sale of illegal products and services on online marketplaces and combat illegal and harmful content on and practices by online platforms.
At a high level, BEUC contends that Temu’s alleged infringements of the Digital Services Act (“DSA”) “relate to the traceability of traders, its compliance by design, transparency of recommender systems, use of several manipulative practices, protection of minors, terms and conditions and out-of-court dispute resolution.” Specifically, BEUC claims that Temu “often fails to provide crucial information to consumers about the sellers of the products [on its platform] and is, therefore, unable to share whether the products meet EU product safety requirements.” Beyond that, the China-founded online shopping platform also “provides inadequate information about its recommender systems and how the different criteria it uses lead to certain products being proposed.”
And still yet, Temu’s online marketplace is “rife with manipulative techniques – dark patterns – to get consumers to spend more than they might originally want to, or to complicate the process of closing down their account,” per BEUC. As such, Temu – which relies on “heavily discounted products and extensively on gamification and intensive advertising to appeal to consumers” – does not “guarantee its users a safe, predictable, and trustworthy online environment, as the law requires.”
> If “dark patterns” rings a bell here, it may be because the U.S. Federal Trade Commission has identified dark patterns as a key priority for its enforcement, with the Lina Khan-led agency taking on Amazon over its “years-long effort to enroll consumers into its Prime program without their consent while knowingly making it difficult for consumers to cancel their subscriptions to Prime.”
In addition to various consumer organizations from the BEUC network filing individual complaints against Temu with their Digital Services Coordinators (pursuant to Article 53 of the DSA), BEUC stated that it felt it necessary to also inform the European Commission of Temu’s infringement of “several major requirements” of the DSA since it considers that Temu is “a de facto Very Large Online Platform (‘VLOP’) with several millions of users across the EU.”
VLOP Status for Temu?
Delving into its claim that Temu is a VLOP, and thus, subject to heightened obligations under the DSA by virtue of its scale and size and the potential influence and impact, BEUC states that Temu “meets the conditions to be designated as a VLOP under Art. 33 DSA.” This designation is based on Temu’s April 2024 report that it “had reached the threshold of more than 45 million average monthly active users with approximately 75 million monthly active users in the EU for the period between October 1, 2023 and March 31, 2024.”
Against this background and given that Shein was designated as a VLOP by the European Commission in April 2024 after making public in late January 2024 that they are above the VLOP designation threshold, BEUC alleges that “the formal designation of Temu by the European Commission as a VLOP is expected to happen at any time soon,” thereby, “trigger[ing] a new set of obligations for Temu.”
With the foregoing in mind, BEUC is calling on the relevant Digital Services Coordinators to implement formal proceedings to assess whether Temu has breached the DSA. If infringements are found, BEUC wants the Coordinators to order the cessation of the infringements and immediate compliance with the DSA for all European consumers and to levy financial penalties on Temu. As for the European Commission, the BEUC requests that it “urgently designate” Temu as a VLOP and monitor Temu’s compliance (or lack thereof) with its obligations once it is designated as a VLOP.
A representative for Temu told TFL, “Temu is a newcomer to Europe, having entered our first markets just over a year ago. During this time, we have listened carefully to feedback from customers, regulatory bodies, and consumer advocacy groups. We have been actively adjusting our service to align with local practices and preferences, and we are committed to full compliance with the laws and regulations of the markets where we operate. We aim not just to meet the minimum legal requirements but to exceed them by adhering to the highest standards of best practices. To achieve this, we work closely with our third-party sellers, regulators, consumer groups, and other stakeholders.”
They further stated, “Regarding the latest BEUC complaint, we take it very seriously and will study it thoroughly. We hope to continue our dialogue with the relevant stakeholders to improve Temu’s service for consumers. Where we identify areas for improvement, we are eager to work together to enhance our service and to rectify any shortcomings. We hold the interest of consumers at heart and strive to provide a safe and trusted service that is valued by consumers and adds significant value. We are committed to transparency and full compliance with all applicable laws and regulations.”