Chinese online retailer Temu hit with US$232 million fine over unsafe toys and electronics

A page from the Temu website is shown in this photo, in New York, June 23, 2023. (AP Photo/Richard Drew, file)

LONDON — Temu was hit with a 200 million euro (US$232 million) fine Thursday after a European Union investigation found the Chinese online retailer failed to protect consumers from illegal products like toxic or hazardous toys and unsafe electronics.

The 27-nation EU’s fine follows preliminary findings last year that Temu was exposing consumers to a high risk of products sold on its platform like baby toys and small electronics that didn’t comply with EU consumer safety rules.

The bloc’s executive arm issued the penalty under the Digital Services Act, or DSA, a wide-ranging rulebook that requires online platforms to do more to keep internet users safe from harmful content or dodgy goods, under the threat of hefty fines.

Temu said it disagreed with the decision and considered the fine “disproportionate.”

The decision relates to the commission’s first DSA evaluation of Temu in 2024 “and does not reflect the current state of our systems,” the company said.

“Temu engaged constructively with the Commission throughout the process and has since taken further steps to strengthen risk assessment, platform governance, and user protection,” it said in a statement.

The company is popular because it offers cheap goods - from clothing to home products — shipped from sellers in China. The platform has 92 million users in the EU and is owned by PDD Holdings Inc., which also owns the popular Chinese e-commerce site Pinduoduo.

The European Commission said Temu failed to identify, analyze and assess the systemic risks of illegal goods for sale on the platform and the resulting harm to European consumers.

Investigators had carried out a “mystery shopping exercise” that turned up a number of “non-compliant” products, including many electronic device chargers that failed basic safety tests. They also found a very high percentage of baby toys that posed safety risks, either because they contained chemicals at levels that exceeded safety limits or because they had parts that came off and could be a suffocation risk.

• Latest updates on company news here

The commission said failing to do proper risk assessments is a particularly serious breach of the bloc’s digital rules.

Risk assessments are “not box‐ticking exercises," European Commission Executive Vice-President Henna Virkunnen said.

“Temu’s risk assessment underestimates concrete risks, lacks specificity, is not grounded in solid evidence, and is not comprehensive,” she said in a prepared statement. “It leaves regulators, users, and the public in the dark about the true scale of potential harm posed by illegal products sold on Temu. Now it is time for Temu to comply with the law.”

Temu has until the end of August to submit an “action plan” to remedy the problem. It could be hit with additional daily, weekly or monthly fines if it fails to comply.

___

AP writer Sam McNeil in Brussels contributed to this report.

Kelvin Chan, The Associated Press