Introduction:
Consumer protection groups across the European Union have filed coordinated complaints against Temu, an ultra low-cost e-commerce platform owned by a Chinese company. The complaints allege that Temu has violated several regulations outlined in the Digital Services Act (DSA). These groups are calling for Temu to be designated as a “very large online platform” (VLOP) under the DSA, which would subject the company to additional transparency and accountability rules. The complaints focus on issues such as trader traceability, manipulative design, and transparency around product recommender algorithms.
Consumer Protection Groups Demand Action:
BEUC, the European consumer organization representing 45 regional consumer protection groups, has filed a complaint against Temu with the European Commission. They are urging the EU to urgently classify Temu as a VLOP under the DSA. This classification would require Temu to comply with stricter rules and mitigate systemic risks. Other major e-commerce platforms like Alibaba, Amazon, and Google Shopping already hold VLOP status. Additionally, 17 of BEUC’s member organizations have filed DSA complaints with their respective national consumer protection authorities.
Alleged Breaches of DSA Regulations:
The coordinated complaints against Temu claim that the platform is failing to meet various DSA requirements. These include trader traceability requirements, rules against manipulative design, and transparency around product recommender algorithms. Monique Goyens, director general at BEUC, has accused Temu of using manipulative techniques to push consumers into spending more money. Insufficient information about traders also leaves consumers unaware of who they are purchasing products from, hindering informed decision-making and compliance with safety regulations.
Concerns About Consumer Safety:
The consumer protection groups have expressed concerns about the safety of products sold on Temu’s platform. They argue that the extreme price discounting and gamification features are likely to attract children. The groups contend that Temu fails to guarantee a safe and trustworthy online environment as required by law. They warn that the combination of dangerous products sold by untraceable traders, manipulative practices, and opaque recommender systems poses a threat to minors’ privacy, safety, and security.
Individual Actions by Consumer Groups:
Before the coordinated complaints, individual consumer groups had already taken action against Temu. Italian consumer group Altroconsumo conducted a test of cosmetics purchased on the platform and found that most products failed to list ingredients properly. The German consumer organization vzbv raised concerns about misleading product reviews and price discounts displayed on Temu’s platform. Currently, oversight of Temu’s compliance with DSA’s general rules falls to competent Digital Services Coordinators in the EU Member States where it operates.
Pressure Mounts for VLOP Designation:
The coordinated complaints against Temu are likely to increase pressure on the EU to designate the platform as a VLOP. The European Commission is aware that Temu has reported over 45 million monthly active users in the EU, which meets the threshold for triggering VLOP status. The Commission has confirmed that it is in contact with Temu regarding a possible designation in the future. Last month, another Chinese e-commerce giant, Shein, was designated as a DSA VLOP after surpassing the 45 million monthly active users threshold.
Ongoing Investigations into VLOPs:
In March, the EU initiated its first investigation on a marketplace under the DSA. The investigation targeted AliExpress, another Chinese-owned e-commerce platform that had already been designated as a VLOP. The Commission suspects AliExpress of breaching DSA rules related to risk management, content moderation, transparency of advertising and recommender systems, traceability of traders, and data access for researchers. This investigation is part of a series of probes launched by the EU into VLOPs since the compliance deadline last year.
Conclusion:
Consumer protection groups in the European Union have filed coordinated complaints against Temu, accusing the platform of violating regulations outlined in the DSA. The groups are demanding that Temu be designated as a VLOP, subjecting the company to additional transparency and accountability rules. The complaints highlight issues such as trader traceability, manipulative design, and transparency around product recommender algorithms. Concerns about consumer safety, particularly regarding minors, have also been raised. The EU is facing mounting pressure to take action against Temu, as similar investigations into other VLOPs are already underway.
