EU Hits Temu With €200m Fine Over Dangerous Products

The European Union on Thursday imposed a 200 million euro  fine on Chinese owned online retailer Temu for allowing the sale of illegal and dangerous products on its platform, including hazardous baby toys and defective chargers, in one of the most significant enforcement actions yet under the bloc’s sweeping new digital rulebook.

European regulators found that the e-commerce giant had failed in its legal duty to protect consumers, ruling that Temu “failed to diligently identify, analyse, and assess the systemic risks of illegal products being offered on its platform and the resulting harm to consumers in the European Union.”

According to the EU, European shoppers are “very likely to encounter illegal items” on Temu, and the company “seriously underestimated how often EU consumers are likely to” see such products. The Commission specifically cited the discovery of baby toys, including rattles, containing chemicals exceeding legal safety limits, alongside chargers that failed basic safety tests and substandard jewellery.

The penalty lands against the backdrop of Temu’s explosive growth in Europe. Since entering the bloc’s market in 2023, the platform has amassed 130 million users, a scale that EU tech commissioner Henna Virkkunen said magnified the risk to consumers. “Temu is a very big player in the European market,” she told reporters, noting that its size meant a “very big part” of EU consumers gain access to such illegal products.

Thursday’s action is only the second fine ever imposed under the EU’s powerful Digital Services Act (DSA), following the 120 million euro penalty slapped on Elon Musk’s X platform in December. The DSA requires the world’s largest digital platforms, spanning social media apps and online marketplaces, to conduct rigorous risk assessments evaluating the dangers they pose and how those risks will be managed.

The Commission ruled that Temu’s 2024 risk assessment “falls short of the standards,” and faulted the company for failing to properly evaluate how the platform’s design “could amplify dissemination risks of illegal products.”

The financial stakes for Temu are considerable. Under the DSA, fines can reach as high as six per cent of a company’s total worldwide annual turnover. With Temu’s revenues hitting $61.7 billion last year, the maximum possible penalty far exceeded the sum imposed. A European Commission official explained that the 200 million euro figure was proportionate to the breach, given that it concerned a one year risk assessment in which the conclusions were “clear-cut.”

Temu now faces a tight compliance timeline. The company must pay the fine and submit a remediation plan to the EU by August 28 detailing the corrective measures it intends to take. Failure to comply could trigger periodic penalty payments. Temu retains the right to appeal, a route Musk has already taken in the EU courts following X’s penalty.

The investigation remains active on other fronts. EU regulators continue to probe suspected breaches involving the use of addictive design features that could harm users’ physical and mental wellbeing, as well as how Temu’s systems recommend content and products to shoppers.

The timing of the fine is politically charged. It arrived one day before the EU executive was scheduled to debate how the 27 nation bloc should recalibrate its approach to China to level the economic playing field, with senior officials warning that Europe must adopt a tougher posture to defend its economy. Brussels has already intensified anti subsidy investigations into Chinese firms investing in Europe, and on Thursday opened an in depth probe into Chinese e-commerce giant JD.com’s bid for Ceconomy, a major German electronics retail group, over suspicions the deal was boosted by state subsidies.