The EU wants to keep Shein on its radar.
The fast-fashion purveyor has been designated a very large online platform (VLOP) under the EU‘s Digital Services Act (DSA), the European Commission announced Friday.
Shein has made the list of VLOPs because it reported that, as of January, it had an average of 108 million monthly active users in the EU; the threshold for VLOPs is 45 million users. It joins 22 other companies, including AliExpress, TikTok and Amazon, in holding a VLOP designation as issued by the bloc.
Due to its new status as a VLOP, the Singapore-based e-tailer will be required to comply with the strictest rules the DSA set forth when it became effective last year. The law was designed to better protect users and consumers from It will have until August to prove it has complied with the expectations that come with the new designation.
As part of its new status, Shein will be required to identify and analyze risks around illegal content and products, then report on those risks. It will also need to mitigate issues “such as the listing and sale of counterfeit goods, unsafe products and items that infringe on intellectual property rights.”
In recent months, Shein has been accused in U.S. courts—both by brands and by small artists—of infringing on trademarks and copyrights. If it wants to be in steady compliance with the EU’s new demands, the company may have to reevaluate its terms of use, its algorithms or its internal processes.
But that doesn’t complete Shein’s new list of obligations. The company’s penchant for drawing in younger uses with ultra-low prices, on-trend styles and varying product categories could now cause greater regulatory hurdles for it.
Part of a VLOP’s responsibility includes evaluating how its services and goods could negatively impact consumers’ safety and health. According to the EU Commission, that includes “an emphasis on the physical and mental well-being of underage users.”
The EU has already shown its chops when it comes to protecting minors. The Commission launched an investigation against the ByteDance-owned company Wednesday over concerns that its “Lite” app in the EU could become addictive for young people, subsequently affecting their mental health. The app in question featured a “task and reward program,” which enabled users to receive points in exchange for certain types of engagement, the Commission noted.
That DSA investigation is the second against TikTok, which already faced scrutiny for its “lack of effective age verification mechanisms and the suspected addictive design.”
Shein floods its users with coupon codes, referral codes and blowout discount codes on the daily, gamifying the shopping experience for its audience. A number of users on X have made mention of Shein being “so addictive.”
Shein will continue to be held responsible for the standard DSA procedures, which apply to a much broader range of companies. The Irish Digital Services Coordinator (IDSC) previously handled the majority of Shein’s DSA compliance oversight, but because of the ramped up requirements, the Commission itself will now deal with the VLOP standards. The IDSC will continue to work with Shein on the more generalized DSA compliance requirements.
And its rival, Temu, may soon be dubbed a VLOP, as well. The marketplace has seen explosive growth in the U.S. after its launch in late 2022, and it said last month that it had about 75 million MAUs in the EU, surpassing the threshold for a VLOP.
Shein, which has a risk assessment due to the Commission in four months, will comply with the new requirements thrust upon it as a byproduct of its VLOP designation, said Leonard Lin, Shein’s global head of public affairs.
“We share the Commission’s ambition to ensure consumers in the EU can shop online with peace of mind, and we are committed to playing our part. We also share a commitment to the principles of transparency and accountability that are at the core of the DSA, as reflected in our supply chain governance standards and our engagements with our users,” Lin said in the statement. “We will continue to work constructively with the European Commission to ensure that we deliver a safe and compliant environment for our online community.”