Temu had also been targeted in a series of complaints<\/a> filed by consumer protection groups from around the bloc \u2014 alleging the platform is rife with manipulative design tricks which they suggested could pose a range of risks to kids. The complaints also accused Temu of operating \u201copaque\u00a0recommender systems\u201d and failing to ensure the traceability of traders, arguing there\u2019s no way for consumers to know if the products it sells meet EU safety standards. <\/p>\nThe Commission said today\u2019s enforcement action draws on concerns set out in the complaints. <\/p>\n
The EU\u2019s RFIs highlights areas where the two marketplaces are facing early DSA scrutiny \u2014 and could prefigure the opening of formal investigations if the bloc\u2019s enforcers deem they\u2019re falling below the legal standard for consumer protection. <\/p>\n
The regime allows for penalties of up to 6% of global annual turnover for confirmed breaches so any compliance failures could end up being costly for the pile-it-high-flog-it-cheap e-tailers. Strict enforcement of higher standards on the marketplaces could even \u2014 potentially \u2014 force changes to business models that clearly hinge on driving high volumes of sales.<\/p>\n
At the very least the pair\u2019s ultra low cost, high volume approach raises question-marks about product quality\/safety \u2014 so EU enforcement in this area looks like an interesting test case for the DSA. <\/p>\n
The Commission appears to have several early concerns about the two marketplaces. In a press release, the EU said it\u2019s asking Shein and Temu for more information about measures they\u2019ve taken to meet DSA obligations related to what\u2019s known as \u201cNotice and Action\u201d mechanisms, which should allow users to notify the marketplaces of illegal products. <\/p>\n
It has also requested info related to the design of their online interfaces, which the pan-EU law mandates must not deceive or manipulate users, such as via so called \u201cdark patterns\u201d. Other areas the Commission said it\u2019s seeking more information from both businesses relate to\u00a0the protection of minors; the transparency of recommender systems (aka the algorithms used to surface things like related products); the traceability of traders; and \u201ccompliance by design\u201d. \u00a0<\/p>\n
While Shein and Temu have only been designated as VLOPs for a matter of months, as noted above the bulk of DSA requirements have applied to both since mid February. And while enforcement of the general rules is typically decentralized to a network of Digital Services Coordinators (DSC) located at EU Member State level, as designated VLOPs Shein and Temu can also face Commission enforcement of the general rules \u2014 i.e. in addition to oversight by the Irish DSC since their regional HQs are located in Dublin. <\/p>\n
EU lawmakers designed this two-tier enforcement structure to avoid the risks of forum shopping being used to undermine enforcement of the DSA on larger platforms, as has happened in the case of decentralized enforcement of the bloc\u2019s General Data Protection Regulation. <\/p>\n
When it comes to the extra set of DSA requirements for VLOPs \u2014 which covers issues like algorithmic transparency and mitigation of systemic risk in areas like minors\u2019 mental health \u2014 the Commission is the sole enforcer. <\/p>\n
Both marketplaces do still have a few months\u2019 grace before compliance with these additional obligations is expected, though: Shein is due to submit its first risk assessment report to the Commission in August; while Temu has until the end of September to file its first risk report. <\/p>\n
Still, with these early RFIs the Commission looks keen to be on the front foot when it comes to assessing those future reports \u2014 and also keen to be seen responding swiftly to what are already widely raised consumer protection concerns. <\/p>\n
Shein and Temu have been given until July 12 to provide the requested information. The EU said it will then \u201cassess next steps\u201d, noting this \u201ccould entail\u201d the formal opening of proceedings, i.e. if it suspects any infringements of the rules. <\/p>\n
Shein and Temu were contacted for comment on the Commission\u2019s RFIs. <\/p>\n
A Shein spokesperson confirmed it has received the request for information from the Commission, telling us the company is \u201cworking to promptly address it\u201d. \u201cWe share the Commission\u2019s goal of ensuring that consumers in the EU can shop online with peace of mind, and we will continue working closely with the Commission to ensure our compliance with the Digital Services Act,\u201d they added. <\/p>\n
A Temu spokesperson also told us: \u201cWe are cooperating fully with the EU. We\u2019d also like to reiterate that we are fully committed to complying with all applicable laws and regulations in the markets where we operate.\u201d<\/p>\n
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