Online fashion retailer Temu added to EU digital rulebook’s ‘systemic risk’ list

5 months ago 34

The European Commission designated online fashion retailer Temu as a “very large online platform” (VLOP) under the EU’s Digital Services Act (DSA) on Friday (31 May).

The DSA, in force since 17 February, aims to create a safer digital environment by clarifying the assignment of responsibility for actors operating online, including how to deal with illegal content online.

According to its rules, online platforms used by more than 10% of the EU’s population monthly, or 45 million users, entail a “systemic risk” for society. As such, they must follow a specific regime of content moderation, including transparency and risk management obligations.

The designation does not come as a surprise as the fast-fashion retailer already said it has 75 million monthly users per month in the EU, well above the DSA’s 45 million threshold.

The online marketplace, operated by the Chinese e-commerce company PDD Holdings, has now been added to the DSA’s list of very large online platforms (VLOPs). However, as of 17 February, Temu, along with all online platforms in the EU, was already required to comply with the general obligations outlined in the DSA.

Temu is “fully committed to adhering to the rules and regulations outlined by the DSA,” a company spokesperson told Euractiv.

Following today’s designation, Temu will “have four months to comply with the most stringent obligations” of the DSA, Commission spokesperson Thomas Regnier said during the Commission’s regular midday briefing on Friday. This means that the deadline for Temu is the end of September.

These rules include diligently monitoring and mitigating platform risks like counterfeit goods, unsafe products, and intellectual property infringements. Temu must provide risk assessment reports to the Commission annually.

It must also enhance user interfaces for reporting illegal listings, improve moderation processes, and refine its algorithms.

It is also required to ensure transparency through external audits and reports and appoint a compliance function subject to yearly independent audits.

Temu’s compliance will be supervised by the Commission in collaboration with the Irish Digital Services Coordinator.

The Irish Digital Services Coordinator is involved because Temu’s parent company is headquartered in Dublin, making Ireland the lead authority overseeing its regulatory compliance. Each member state has to appoint a Digital Services Coordinator to ensure effective implementation and enforcement of the DSA within their jurisdiction.

In May, European consumer organisation BEUC lodged a complaint with the EU against Temu for potential DSA breaches.

Allegations included Temu’s failure to provide crucial seller information and ensure product safety compliance, along with accusations of manipulative practices such as dark patterns to stimulate excessive spending, despite its 75 million monthly EU users.

The Commission has designated a total of 24 VLOPs and very large online search engines (VLOSEs) under the DSA, including Temu. In April, Chinese online fashion retailer Shein was also designated as a VLOP.

[Edited by Eliza Gkritsi/Zoran Radosavljevic]