GoKawiilThe European Commission has slapped Temu with a €200 million ($232 million) fine for failing to prevent the sales of illegal products on its platform. "Evidence showed that there is a high risk for consumers in the EU to encounter illegal products on the platform" in violation of the Digital Services Act (DSA) including baby toys and small electronics, the EC wrote in a press release.
Temu first entered the European market in 2023, selling products at bargain-basement prices ranging from clothing to electronics. European regulators opened a probe into the company's activities shortly afterwards, claiming it was selling illegal products.
At the time, Temu said that it would fully cooperate with regulators to improve safety and strengthen its compliance system. However, the EC wrote that "Temu's risk assessment of October 2024 was inaccurate... [and] may therefore have led to inadequate mitigation measures against the dissemination of illegal products."
The fine was specifically related to the company's compliance measures, but regulators are also probing Temu for selling specific products that don't meet EU safety standards. France has called for stronger measures against online China-based platforms after accusing both AliExpress and Shein for selling childlike sex dolls on their platforms.
In a statement to The Financial Times, Temu said it disagreed with the EC's decision and called the fine "disproportionate." It added that it had taken additional steps to strengthen its governance and risk assessment, and said the decision did "not reflect the current state of our systems."
Temu is just the second company to be penalized by Europe under the Digital Services Act, following a €120 million ($140 million) fine levied on Elon's Musk's X platform. Temu now has until August 2026 to come up with an action plan detailing how it will address illegal product sales in Europe. If that's deemed unsatisfactory, the EC could levy fines up to six percent of its annual global revenue. On top of that, Temu's European business may take a hit in July once the bloc starts imposing a flat €3 fee on ecommerce parcels valued under €150.