EU Regulators Demand Compliance Details from Temu and Shein Under Digital Services Act

Chinese fast-fashion e-commerce giants Temu and Shein are under scrutiny by European Union (EU) regulators, who have mandated that the companies provide detailed accounts of their compliance with EU online content rules by July 12, 2024. This directive follows complaints from consumer bodies and represents a significant enforcement of the EU’s Digital Services Act (DSA).

The Digital Services Act and Its Implications

The DSA imposes stringent requirements on digital platforms, particularly those classified as Very Large Online Platforms (VLOPs), due to their extensive user bases. These requirements aim to enhance the accountability of these platforms in combating illegal and harmful content, ensuring user protection, and promoting transparency.

The fast-fashion industry has designated Temu and Shein as VLOPs. This designation subjects them to heightened scrutiny and demands greater efforts in monitoring and managing the content on their platforms.

Moving markets

EU Commission’s Requests

The European Commission has formally requested that Temu and Shein provide comprehensive information regarding several key aspects of their operations:

  1. Notification of Illegal Products: The companies need to detail the mechanisms they have in place for users to report illegal products. This is crucial in ensuring that harmful or counterfeit goods do not proliferate on their platforms.
  2. Prevention of Deceptive Practices: The Commission is interested in understanding how Temu and Shein design their online interfaces to prevent users from being misled or manipulated through dark patterns. Dark patterns are user interface designs that trick users into making unintended decisions, often to the detriment of their privacy or financial well-being.
  3. Protection of Minors: With the increasing concern over the exposure of minors to inappropriate content, the Commission is seeking information on the measures both companies employ to safeguard younger users.
  4. Transparency of Recommendation Systems: The transparency of algorithm-driven recommendation systems is another area of interest. The Commission wants to know how these systems operate and ensure they do not promote harmful content.
  5. Traceability of Traders: Ensuring that traders on the platforms are traceable is essential for accountability and consumer protection. The Commission has asked for details on how Temu and Shein manage trader information and ensure compliance with EU laws.
  6. Compliance by Design: Finally, the Commission has requested insights into how compliance with EU regulations is integrated into the companies’ platform designs from the outset.

Potential Consequences for Non-Compliance

The stakes for Temu and Shein are high. Under the DSA, violations can lead to substantial fines, potentially amounting to as much as 6% of a company’s global turnover. This could translate into billions of dollars for companies of their size, emphasising the seriousness of the EU’s demands.

The Broader Context

This move by the EU regulators is part of a broader effort to ensure that digital platforms operate in a manner that is transparent, fair, and protective of consumers’ rights. The complaints from consumer organisations have highlighted the need for stringent enforcement of these principles.

As the deadline of July 12 approaches, all eyes will be on Temu and Shein to see how they respond to the EU’s demands. Their responses will not only have an impact on their operations in Europe, but they could also set a precedent for other digital platforms under the purview of the DSA.

In the rapidly evolving landscape of digital commerce, the actions taken by regulators and the compliance of major players like Temu and Shein will shape the future of online consumer protection and platform accountability.


About Post Author