Shein and Temu Under EU Scrutiny for DSA Compliance
Ultra-low-cost e-commerce giants Shein and Temu are now subject to the strictest layer of the European Union’s Digital Services Act (DSA). On Friday, the Commission announced it had sent requests for information (RFI) to both platforms regarding their compliance with various requirements of the law. The DSA aims to raise standards on digital services, including marketplaces, to reduce consumer risks associated with the sale of illegal or dangerous goods.
Shein and Temu have been under the general rules of the DSA since mid-February but were designated as very large online platforms (VLOPs) in April and May, respectively. This designation increases their regulatory risk, especially as the Commission enforces oversight. Temu has already faced complaints from consumer protection groups, alleging manipulative design tricks and opaque recommender systems that could endanger children and fail to ensure product safety.
The Commission’s RFIs focus on several areas, including “Notice and Action” mechanisms for illegal products, the design of online interfaces to avoid user manipulation, protection of minors, transparency of recommender systems, and traceability of traders. Both marketplaces have until July 12 to respond. Failure to comply could lead to penalties of up to 6% of their global annual turnover, potentially forcing changes to their high-volume, low-cost business models.
Shein and Temu are preparing their first risk assessment reports, due in August and September, respectively. The Commission aims to assess these reports promptly and respond to consumer protection concerns. The two-tier enforcement structure of the DSA seeks to prevent forum shopping and ensure robust enforcement. Both companies have expressed their commitment to complying with the DSA and are cooperating with the Commission.
