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Prove You’re Legit: Screws Tightened On Temu

Earlier this year online Chinese marketplace Temu was ordered by the European Union (EU) to explain how it ensured unsafe and counterfeit goods were not being sold on its platform.

Temu – which is in competition with the likes of Alibaba, eBay and Amazon – has not supplied the requested information, according to a Bloomberg report.

“The European Commission will open formal proceedings against the platform — run by Chinese-owned PDD Holdings Inc. — to probe whether it is in breach of rules against illicit online activities,” Bloomberg published, citing unnamed sources.

“The investigation could be announced imminently, but the timing could also slip, as the Brussels-based executive body prepares for a changeover of its political leaders …”

Temu specials.

Temu sells items from clothing, bedding, coffee makers and shoes to toys, luggage and electronics, and could face fines of up to six per cent of its global annual revenue.

In Australia Temu has quickly garnered a large customer base, with a Roy Morgan survey in March saying more than 1.2 million Australians shopped with the site each month, and that sales in Australia were set to reach about $1.3 billion this year.

Choice has surveyed hundreds of Temu customers in Australia and found 62 per cent had bought home or kitchen items and half had bought clothes.

“Other popular purchases included jewellery and accessories (31 per cent), art and craft items (28 per cent) and toys and games (27 per cent),” the consumer website said. “Around 83 per cent of people we surveyed said they were satisfied with what they had bought.

“‘You get what you pay for’ was a common verdict among customers, many of whom felt the quality of the items they’d bought had been in line with their expectations – which were often low.”

Around three quarters of respondents (77 per cent) said they would buy from Temu again and 73 per cent said they would recommend it to others.

 

Temu electronics for sale.

The EU’s Digital Services Act (DSA) regulates online intermediaries and platforms such as marketplaces, social networks, content-sharing platforms, app stores and online travel and accommodation platforms. 

The DSA says its “main goal is to prevent illegal and harmful activities online and the spread of disinformation. It ensures user safety, protects fundamental rights, and creates a fair and open online platform environment”.

“The roles of users, platforms and public authorities are rebalanced according to European values, placing citizens at the centre.”

In August 2023 the DSA applied to “designated platforms with more than 45 million users in the EU (10 per cent of the EU’s population), the so-called Very Large Online Platforms (VLOPs) or Very Large Online Search Engines (VLOSEs)”.

In February this year the net was widened to include “all platforms”.

Temu PR photo.

In May the EU designated Temu as a VLOP and stated: “Following today’s designation as a VLOP, Temu will have to comply with the most stringent rules under the DSA within four months of its notification (i.e., by the end of September 2024), such as the obligation to duly assess and mitigate any systemic risks stemming from their services, including the listing and sale of counterfeit goods, unsafe or illegal products, and items that infringe intellectual property rights.”

It stated that the company had to undertake “more diligent surveillance of illegal products” and ordered Temu to supply risk assessment reports to the European Commission four months after the notification of the formal designation and thereafter one a year”.

Temu was ordered to “put in place mitigation measures to address risks, such as the listing and sale of counterfeit goods, unsafe products, and items that infringe on intellectual property rights”.

“These measures can include adapting the terms of service, enhancing user interface design for better reporting and detection of suspicious listings, improving moderation processes to swiftly remove illegal items, and refining its algorithms to prevent the promotion and sale of prohibited goods,” the EU said.

A spokesperson for Temu told ChannelNews: “Temu takes its obligations under the DSA seriously, continuously investing to strengthen our compliance system and safeguard consumer interests on our platform. We will cooperate fully with regulators to support our shared goal of a safe, trusted marketplace for consumers.

“In a separate development, we can confirm that we are in discussions to join the ‘Memorandum of Understanding (MoU) on the sale of counterfeit goods on the Internet’, a voluntary agreement facilitated by the European Commission.”



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