EU Accuses Temu of Flooding Market with Illegal Products, Faces Billions in Fines

The European Union has launched a blistering attack on Chinese e-commerce giant Temu, accusing it of systematically failing to prevent the sale of illegal and dangerous products to European consumers—from toxic baby toys to electrocution-risk electronics—and warning the company could face fines exceeding billions of dollars. The formal accusations, detailed in preliminary findings under the EU's powerful Digital Services Act (DSA), allege a "high risk" for the platform's 93 million monthly EU users to encounter hazardous goods, with regulators pointing to Temu's "inaccurate" risk assessments and inadequate safety measures Source: Yahoo Finance, Fortune.

At the heart of the EU's case is evidence gathered through a "mystery shopping exercise" that found consumers were "very likely" to encounter non-compliant items. Regulators identified specific dangers, including baby toys made with toxic chemicals like hormone-disrupting phthalates found at levels hundreds of times above legal limits, posing strangulation or choking hazards. Small electronics were also flagged, such as phone chargers falsely marked as certified but delivering dangerous 240V shocks and faulty bike helmets offering no protection in a fall Source: Euronews, Yahoo Finance, Hacker News Discussion.

Legal Reckoning Under the Digital Services Act

The accusations stem from Temu's designation as a "Very Large Online Platform" (VLOP) under the DSA, a landmark EU law demanding rigorous risk management, transparency, and consumer protection from major digital players. The European Commission provisionally found Temu violated core DSA obligations by failing to conduct a proper, platform-specific assessment of the risks posed by illegal products. Its October 2024 assessment was slammed as "too generic," relying on broad industry data instead of analyzing its own marketplace realities Source: Tech.eu, Digital Strategy EC.

"The Commission found a high risk for consumers in the EU to encounter illegal products on Temu’s site," stated regulators, emphasizing the platform's duty to proactively identify and mitigate such dangers Source: PBS. This alleged failure forms the basis for potential sanctions under Article 34 of the DSA. If the preliminary findings are confirmed after Temu's right to defend itself, the company faces staggering fines of up to 6% of its total global annual revenue. Given Temu's explosive growth since entering the EU market in 2023, this could translate to penalties well into the billions of dollars Source: ABC News, AInvest.

Beyond Dangerous Goods: A Wider Web of Concerns

The product safety accusations are just one facet of a broader, ongoing EU investigation into Temu's operations. Regulators are also scrutinizing other suspected DSA breaches, including the platform's use of "addictive design features" to keep users shopping, the lack of transparency around how its algorithms recommend products, and whether it provides adequate data access to researchers. Concerns were also raised about the traceability of sellers and measures to protect minors Source: Fortune, The Verge.

This crackdown reflects growing EU alarm over the flood of ultra-cheap, often non-compliant goods from Chinese e-commerce platforms. Internal audits reportedly revealed "frequent listings of illegal or unsafe items," with some studies suggesting a staggering 85-95% of products from Temu and similar platforms fail EU safety laws, involving grave risks like lead contamination, fire hazards, and unregulated components in children's items Source: Hacker News Discussion. EU Commissioner Thierry Breton expressed shock at the "toxicity and dangers" of some goods sold, vowing a tougher stance Source: The Guardian.

Temu's Response and the Road Ahead

Facing potentially existential financial penalties and operational constraints, Temu has struck a cooperative tone publicly. The company stated it takes "product safety and compliance very seriously" and pledged to "continue to cooperate fully with the Commission" Source: DW, Cyprus Mail. It points to its systems for seller vetting, monitoring, and takedowns. However, regulators highlighted a critical flaw: Temu reportedly lacks the ability to directly contact consumers who purchased affected dangerous products, making effective recalls nearly impossible Source: Cyprus Mail.

The case represents a major test of the EU's ability to enforce its digital rulebook against global giants. Beyond the immediate fines, compliance could force Temu into a costly overhaul. Analysts estimate DSA compliance costs for platforms like Temu could reach hundreds of millions annually, akin to Amazon's burden. Furthermore, the DSA mandates Temu establish an EU-based operator to enforce product safety under the General Product Safety Regulation (GPSR), adding another layer of oversight and expense Source: AInvest.

Temu now has several weeks to formally respond to the EU's findings and examine the evidence before a final decision. The outcome will resonate far beyond this single company, signaling the EU's determination to hold online marketplaces accountable for the physical safety of products sold to European consumers in the digital age Source: Euronews, SCMP.