Temu Faces New EU Investigation Into ‘Problematic’ Sale Practices

The popular shopping app could face EU penalties if it failed to address the potentially misleading sales practies.

The logo of Chinese e-commerce company Temu is displayed on a mobile phone held in front of a screen bearing a website page of the e-commerce company, in Brussels, on Nov. 4, 2024. Nicolas Tucat/AFP via Getty Images

The European Union (EU) has told Chinese online retailer Temu to put an end to its “problematic” commercial practices or risk facing penalties, the 27-nation bloc’s executive arm said on Nov. 8.

The European Commission’s move follows the launch of an investigation into whether Temu adequately prevented the sale of illegal products on its platform, adding to the regulatory hurdles it’s already grappling with in the EU.

In an online statement, the Commission listed the specific commercial activities that it considers could mislead consumers and infringe upon EU laws.

The alleged problematic practices include showing non-existent discounts, using tactics like fake countdown timers or limited stocks to pressure users into making quick purchases, displaying partial or wrong information about consumers’ rights to return or refunds, and lacking terms to verify the authenticity of product reviews. The Commission noted that national regulators have found reviews they suspected to be fake.

Furthermore, authorities criticized Temu for allegedly forcing users to play a game called “Spin the Fortune Wheel” to access the platform while obscuring the terms and conditions linked to potential rewards.

Additionally, the authorities took aim at Temu for allegedly failing to provide clear contact information, which complicates matters for consumers looking to ask questions or lodge complaints.

The commission has granted Temu a one-month deadline to respond and explain how it plans to address these issues.

Should Temu’s responses not meet the regulators’ expectations, the Commission said its national consumer authorities could take action. This could include the imposition of financial penalties based on the company’s revenue in the respective countries where violations were observed, as well as the potential adoption of other regulatory measures aimed at ensuring compliance with consumer protection laws.

This investigation is a joint effort by the Commission and the national consumer authorities of Belgium, Germany, and Ireland through the EU’s Consumer Protection Cooperation Network.

“All market players targeting consumers in the Single Market must respect EU consumer laws, no matter if they are established within or outside the Union,” Didier Reynders, the EU’s chief justice official, said in a Nov. 7 statement. “Temu must now take EU rules seriously and bring its practices into full compliance with EU consumer laws.”

European Consumer Organisation, an umbrella group of consumer organizations from 31 European countries, welcomes the Commission’s decision. It says the move increases the pressure on Temu to comply with EU law. The Commission should “show their teeth” and “start imposing large fines” if the Chinese e-retailer fails to do so immediately.

Asked about the EU’s decision, Temu said they acknowledged the authorities’ concerns and expressed their commitment to collaborate with regulators to ensure compliance with EU laws.

“Although we have gained popularity with many consumers in a relatively short time, we are still a very young platform—less than two years in the EU—and are actively learning and adapting to local requirements,” a Temu spokesperson said in a statement to The Epoch Times on Nov. 11.

“We will fully cooperate with this investigation, as we believe that such scrutiny benefits consumers, merchants, and the platform in the long term.”

Temu is the Western offshoot of Pingduoduo, one of the biggest online shopping platforms in China. By selling low-cost products made mostly in China, Temu has gained explosive growth since entering the European market in April last year.

After the company reported to the Commission that its average monthly users had surpassed 75 million, the EU executive labeled it a “very large online platform” at the end of May. This designation requires the Chinese retailer to meet the “most stringent rules“ under the Digital Services Act (DSA), a sweeping law designed to crack down on illegal content or activities.

Last week, the EU stepped up its scrutiny of Temu by initiating formal proceedings to investigate potential breaches of the DSA. Regulators are examining risks stemming from the sales of illegal products and the platform’s “potentially addictive” design, including “game-like reward” programs and other issues.

If Temu is found in violation of the DSA, it could face fines that go up to 6 percent of its global turnover.

Temu has also come under fire in the United States due to concerns over intellectual property rights, forced labor, and fears that personal data collected by the app may end up in the hands of the Chinese Communist Party.

In June, Arkansas sued the app-only shopping platform, alleging violations of state privacy laws and deceptive trade practices. Arkansas Attorney General Tim Griffin later cautioned American consumers to stop using the app, and alleged it to be a “data theft business.”