European Regulators Are Taking A New, Tougher Approach To Temu

The law cited in this case has already been used to crack down on Shein. European Regulators Are Taking A New, Tougher Approach To Temu Giphy

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E-commerce companies like Shein and Temu have become popular among value-conscious consumers. But regulators are concerned about the way they’ve been able to provide goods at such bargain-basement prices.

And the European Commission, which has already amped up its regulation of Shein, is now setting its sights on Temu.

What does it mean?

Essentially, the EU’s increased oversight stems from a provision in its Digital Services Act that sets higher compliance standards for any business determined to be a “Very Large Online Platform,” or VLOP.

And with more than 45 million monthly users across the European Union, there’s little doubt that Temu qualifies for that label.

As such, Temu will have to operate within the confines of the DSA — and that means guaranteeing it won’t run afoul of any of the “systemic risks” laid out in the legislation. Any VLOP operating in the EU is responsible for guaranteeing that it doesn’t sell counterfeit or illegal merchandise as well as steering clear of any items that include another brand’s intellectual property.

Why now?

Temu has been a major online retailer for years, so it might seem surprising that the European Consumer Protection Organization has waited until now to bring the regulatory hammer down. But officials say it's the alleged actions of the company itself that has brought on these new restrictions.

More than a dozen groups joined forces to issue complaints about Temu’s business practices, arguing, among other things, that it had used deceptive practices to shield the origins of its products and implemented shady tactics aimed at manipulating consumers into buying more of its merchandise.

Now that Temu finds itself under the thumb of the DSA, it has four months to provide a “systemic risk assessment report” and will be required to do so once a year in the future.

Chris Agee
Chris Agee June 1st, 2024
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