🛍️ Compliance with Digital Services Act
The European Commission has requested that fast fashion giants Shein and Temu provide detailed information on their compliance with the Digital Services Act by July 12, 2024. The act, aimed at ensuring a safe and transparent online environment, includes mechanisms for users to flag illegal products and requirements to prevent deceptive design practices. This request follows a report from consumer organizations alleging Temu’s non-compliance. The report, filed in May, did not accuse Shein but highlighted the need for both platforms to ensure a trustworthy online space.
📈 Platforms Under Scrutiny
Shein and Temu, categorized as "Very Large Online Platforms" with over 45 million EU users monthly, must meet stringent DSA regulations. These include protecting minors, ensuring transparent recommendation systems, and maintaining trader traceability. Failure to comply could lead to formal proceedings by the Commission. A Shein spokesperson emphasized their commitment to EU consumer safety, stating they are working closely with the Commission. Temu also confirmed their full cooperation and commitment to legal compliance in all their operational markets.
📋 Broader Legal Challenges
This EU request adds to the regulatory challenges Shein and Temu face globally. Both companies are under U.S. congressional review for potential use of forced labor. Shein faces allegations of underpaying factory workers and multiple copyright infringement lawsuits. Temu, accused of installing malware on user devices and mishandling data, is facing class action lawsuits and a consumer protection lawsuit filed by Arkansas Attorney General Tim Griffin. Despite these issues, consumer surveys show continued high usage, though trust remains low.
⚖️ Legal Dispute Between Rivals
Shein and Temu are also embroiled in a legal dispute against each other. In December 2023, Temu accused Shein of illegally interfering with its business operations. Despite ongoing legal battles and trust issues, a significant portion of U.S. consumers continue to shop on both platforms. In a survey, 68% of U.S. consumers reported shopping on Temu, while only 6% trusted it. Shein, meanwhile, was shopped by 43% of surveyed consumers. These statistics highlight the paradox of consumer behavior amidst legal and trust concerns.
Will Shein and Temu comply with EU's Digital Services Act?
