Shein and Temu must detail compliance with EU law

Dive Brief:

• Shein and Temu have until July 12 to respond to the European Commission’s request for information on measures the brands have taken to comply with the Digital Services Act, according to a recent press release from the Commission.
• The Commission is specifically asking the fast fashion giants to provide information on how they comply with the “Notice and Action mechanism” portion of the act, which allows users to flag illegal products. The request also asks Shein and Temu to describe their online interfaces’ compliance with the law, which also says the platforms should be designed to not deceive and manipulate users.
• The action was taken in response to a report submitted by consumer organizations in May that alleged Temu violated the DSA by not guaranteeing users a “safe, predictable, and trustworthy online environment as the law requires.” This report focused on Temu and didn’t accuse Shein.

Dive Insight:

Shein and Temu are designated “Very Large Online Platforms,” which the Commission defines as those with more than 45 million users per month in the EU. Entities such as this are subject to the Commission and the DSA.

The Commission additionally asked that Shein and Temu describe their compliance with regulations required in the act, such as the protection of minors, the transparency of recommendation systems, the traceability of traders and compliance by design, per the release.

The Commission will assess its next steps following responses from Shein and Temu. This could “entail the formal opening of proceedings,” per the release.

Shein is working to promptly address the request for information, a Shein spokesperson said in an email to Fashion Dive.

“We share the Commission’s 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,” the spokesperson said.

In a separate statement, a Temu spokesperson said it was fully cooperating with the EU.

“We’d also like to reiterate that we are fully committed to complying with all applicable laws and regulations in the markets where we operate,” a Temu spokesperson said in an email to Fashion Dive.

The Commission’s request is the latest in a series of regulatory and legal challenges against Shein and Temu. Both companies are undergoing congressional review in the U.S., in which lawmakers asked the companies to ensure that their products weren’t made with forced labor.

Shein has been accused of underpaying its factory workers and is also facing several copyright infringement complaints, one a class action lawsuit and another action brought under federal racketeering laws, among others. 

Meanwhile, Temu is facing two class action lawsuits that claim it loaded dangerous malware and spyware onto users’ devices, collected data beyond what is necessary, and failed to secure customers’ personal and financial data. Last week, Arkansas Attorney General Tim Griffin filed a consumer protection lawsuit against Temu under similar claims.

The two companies are also involved in a legal dispute with each other. In December 2023, Temu accused Shein of trying to illegally interfere with Temu’s business.

Despite consumers reportedly not trusting Temu, they still shop there. In one survey, some 68% of U.S. consumers shopped on Temu, and only 6% said they trusted the platform. Meanwhile, the same report found that 43% of U.S. consumers surveyed shopped on Shein.