Brussels Imposes Record Fine on Temu Under Digital Services Law
This Thursday, the European Commission sanctioned the Chinese e-commerce platform, Temu, with the largest fine imposed so far under the Digital Services Law. The move comes after Brussels found that Temu failed to detect and prevent the sale of dangerous items reaching European consumers, including everything from electrical chargers to baby toys.
What Exactly Happened
The allegations against Temu are serious. Brussels claims the platform “did not identify, analyze, or evaluate with due diligence the systemic risks” associated with the sale of illegal products. This not only places consumers at risk but also violates the Digital Services Act (DSA), which mandates that large platforms monitor the products offered on their services. The €200 million fine is significantly higher than the previous record penalty of €120 million imposed on a social network last December, marking this as a pivotal moment in the enforcement of the DSA.
No Effective Filters
The European Commission emphasizes that the problem lies not with specific defective products, but with Temu’s broader security shortcomings. According to the Commission, “evidence collected indicates that European consumers are very likely to encounter illegal items on Temu.” This suggests a systemic failure in the company’s ability to effectively filter and manage the products it offers.
Investigative Findings
This conclusion was supported by an independent contractor’s “secret shopping” study, which involved laboratory tests on randomly selected items. The findings highlighted alarming issues in three product categories:
- Electric Chargers: A substantial percentage failed basic safety tests, indicating potential risks like short circuits and burns.
- Toys and Baby Products: Many items posed medium- or high-severity hazards, including excessive chemical levels or choking risks from detached parts.
- Jewelry: Similar irregularities were noted in this category.
The findings were corroborated by customs data and the European market surveillance database (ICSMS), further inflating the concerns about non-compliance.
Platform Technology Under Scrutiny
In addition to product issues, the European Commission criticized Temu’s platform technology, particularly its recommendation systems and influencer-driven promotions, suggesting these features may be amplifying the issue of unsafe products. The Commission noted that Temu’s 2024 risk assessment relied on generic industry data rather than solid evidence specific to its operations, disregarding previous warnings from consumer associations in Nordic countries.
The Financial Impact of the Fine
While a €200 million penalty is a noteworthy sum, it represents only 0.38% of Temu’s estimated €53 billion turnover for 2025, far below the 6% maximum penalty limit stipulated by regulations. The Commission remains firm in its stance that the fine is proportionate, especially since it is tied to a broader investigation that started in 2024, prompted by complaints from the European Consumer Organization (BEUC) and its 17 national affiliates.
Next Steps for Temu
Temu now has three months to pay the fine and until August 28 to submit a “corrective action plan.” This plan will be reviewed by the European Committee for Digital Services, which has one month to respond. Should Temu fail to comply, the company risks incurring additional periodic fines until rectifications are made.
Temu may appeal the decision to European courts, but the Commission has reiterated that the fine is final and will not be reduced, even if the company takes corrective measures.
As e-commerce continues to expand globally, regulatory bodies like the European Commission are becoming increasingly vigilant, ensuring consumer safety and compliance in an ever-evolving digital marketplace.