Online retailer Temu is facing a 200-million euro (CAD $322 million) high quality after an investigation by the European Union found that the corporate did not protect customers from illegal products, including dangerous toys and faulty electronics.
The EU’s high quality follows findings from an investigation opened in 2024. Preliminary findings from that had indicated that Temu was exposing consumers to high-risk products that weren’t compliant with the union’s consumer safety standards.
The ultimate report was published on Thursday.
“The evidence on the disposal of the Commission indicates that buyers within the EU are very more likely to encounter illegal items on Temu,” it said in a report published Thursday.
Mystery shopping exercises conducted within the investigation found that a “very high percentage” of electronic chargers failed standard safety checks, the commission said, adding that “a high percentage of tested baby toys posed safety risks of medium to high severity” because they contained “chemicals exceeding legal limits or posed suffocation hazards.”
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Regulators also examined the risks posed by Temu’s “addictive design,” including “game-like” reward programs and the steps the corporate is taking to mitigate those risks, in keeping with the initial investigation announcement from 2024.
The trade bloc imposed the penalty under the Digital Services Act (DSA), a wide-ranging rulebook that requires online platforms to guard online users from harmful content or dangerous goods and carries the specter of heavy fines.
An individual navigates the Temu website on a smartphone in Toronto on April 4, 2023. Temu is accused of violating users’ privacy rights in a series of proposed class-action lawsuits.
THE CANADIAN PRESS/Giordano Ciampini
Temu told Global News in an email statement that it “disagreed” with the commission’s findings and said the high quality was “disproportionate.”
“The choice pertains to our first DSA assessment in 2024 and doesn’t reflect the present state of our systems,” the corporate said, adding that it “engaged constructively with the Commission throughout the method and has since taken further steps to strengthen risk assessment, platform governance, and user protection.”
“We are going to proceed to interact with regulators in good faith and work toward a marketplace that serves consumers, businesses, and communities responsibly. We’re reviewing the choice fastidiously and considering all available options,” the statement concluded.
Temu is the second digital platform to be fined under DSA rules.
The Brussels-based commission penalized Elon Musk’s X 120 million euros (CAD $193 million) under the identical act last 12 months for several regulatory breaches. It was the primary time a high quality had been issued under DSA rules, which got here into effect in November 2022.
The Chinese firm entered Western markets only previously three years and launched in Canada in 2023. Low-cost goods — from clothing to home products — shipped from sellers in China led to its significant growth in popularity.
Temu has also faced scrutiny in the US, where a congressional report last 12 months accused the corporate of failing to stop goods made by forced labour from being sold on its platform.
There are currently no formal investigations into Temu’s practices by official regulatory bodies in Canada, though there may be a national class-action lawsuit against the net shopping platform for collecting data from its users in excess and in amounts greater than it discloses, in keeping with the Consumer Law Group.
— with files from The Associated Press