Temu was fined 200 million euros ($232 million) on Thursday after a probe by the European Union revealed that the Chinese online retailer had neglected to shield customers from illicit goods such as dangerous gadgets and toxic or hazardous toys.
The 27-nation EU’s fine comes after preliminary findings last year that Temu was putting customers at danger by selling goods on its platform that didn’t adhere to EU consumer safety regulations, such as baby toys and tiny electronics.
The penalty was imposed by the bloc’s executive branch under the Digital Services Act, or DSA, a comprehensive set of regulations that imposes heavy fines on online platforms for failing to take additional steps to protect users from dangerous information or dubious products.
Following a $120 million charge for Elon Musk’s social media platform X last year, this is the second time Brussels has imposed a fine under the three-year-old DSA.
Temu declared that it disapproved of the ruling and thought the fine was “disproportionate.”
Temu stated that the ruling “does not reflect the current state of our systems” and is related to the commission’s initial DSA assessment of Temu in 2024.
According to a statement, Temu “engaged constructively with the Commission throughout the process and has since taken further steps to strengthen risk assessment, platform governance, and user protection.”
The company is well-known since it ships inexpensive things from Chinese vendors, ranging from apparel to household goods.
PDD Holdings Inc., which also controls the well-known Chinese e-commerce site Pinduoduo, is the owner of the platform, which has 92 million members in the EU.
Temu failed to recognize, evaluate, and assess the systemic risks of illicit items for sale on the platform and the ensuing harm to European consumers, according to the European Commission.
Several “non-compliant” products, including numerous electronic device chargers that failed basic safety checks, were discovered by investigators during a “mystery shopping exercise.”
Additionally, they discovered a relatively high percentage of baby toys that were dangerous, either because they had parts that fell off and could be a suffocation hazard or because they contained chemicals at levels that exceeded safety guidelines.
According to the commission, a particularly significant violation of the bloc’s digital regulations is the failure to do adequate risk assessments.
Henna Virkunnen, Executive Vice-President of the European Commission, stated that risk assessments are “not box-ticking exercises.”
She stated in a prepared statement that Temu’s risk assessment “underestimates concrete risks, lacks specificity, is not grounded in solid evidence, and is not comprehensive.”
Regulators, consumers, and the general public are kept in the dark regarding the actual extent of the possible harm caused by illicit goods offered on Temu. Temu must now abide by the law.
Temu must present an “action plan” to address the issue by the end of August. If it doesn’t comply, it can be subject to further daily, weekly, or monthly fines.
