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Ultra - low - cost e - commerce giantsSheinandTemuhave only recently been affirm as capable to centralized enforcement of the strict layer of the European Union ’s digital services regulation , the Digital Services Act ( DSA ) , but on Friday the Commissionannouncedit ’s sent a bunch of asking for information ( RFI ) to both platform vis - à - vis to their abidance with various requirements of the law .
The DSA is the bloc ’s recently rebooted on-line rulebook which aims to erect standards on digital services including marketplaces — with lawmakers touting the regime as their tool of selection to wither consumer risk in orbit like the sale of illegal or dangerous goods .
The two marketplace have been capable to the government ’s worldwide rules sincemid Februarybut were recently designate as so - call off very large online platforms ( VLOPs ) under the DSA , back in April and May respectively , further amping up their regulatory peril as Commission enforcers joined in the oversight .
Just onwards of its assignment as a VLOPTemu had also been target in a series of complaintsfiled by consumer protection groups from around the bloc — alleging the chopine is rife with manipulative design tricks which they evoke could posture a orbit of risks to small fry . The complaints also impeach Temu of operating “ unintelligible recommender systems ” and give out to ensure the traceability of dealer , contend there ’s no way for consumers to know if the product it sell meet EU prophylactic standard .
The Commission said today ’s enforcement action mechanism draw on concerns set out in the complaint .
The EU ’s RFIs play up field where the two marketplaces are face early DSA scrutiny — and could prefigure the opening of formal investigation if the bloc ’s enforcers deem they ’re fall below the effectual standard for consumer auspices .
The regime allows for penalties of up to 6 % of spheric annual upset for confirmed severance so any compliance failure could end up being costly for the pile - it - high - flog - it - loud e - tailers . Strict enforcement of higher standards on the market could even — potentially — force changes to business models that clearly hinge on drive high mass of sales .
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At the very least the pair ’s ultra - low - cost , mellow - volume approach raises question - marks about product quality / guard — so EU enforcement in this sphere calculate like an interesting test case for the DSA .
The Commission appears to have several former worry about the two marketplaces . In a press tone ending , the EU said it ’s ask Shein and Temu for more entropy about measures they ’ve take to fulfill DSA obligations relate to what ’s known as “ Notice and Action ” mechanisms , which should admit exploiter to notify the marketplaces of illegal products .
It has also requested info relate to the blueprint of their online interfaces , which the pan - EU law mandates must not deceive or fake users , such as via so - called “ dreary patterns ” . Other sphere the Commission said it ’s seeking more entropy from both clientele associate to the tribute of minors ; the transparence of recommender systems ( aka the algorithmic program used to show up affair like related merchandise ) ; the traceability of traders ; and “ compliance by design ” .
While Shein and Temu have only been designated as VLOPs for a matter of months , as noted above the bulk of DSA requisite have applied to both since mid February . And while enforcement of the universal rules is typically decentralized to a internet of Digital Services Coordinators ( DSC ) located at EU Member State spirit level , as destine VLOPs Shein and Temu can also face Commission enforcement of the cosmopolitan rule — i.e. in gain to oversight by the Irish DSC since their regional HQs are located in Dublin .
EU lawmakers designed this two - tier up enforcement structure to obviate the risk of forum shopping being used to countermine enforcement of the DSA on larger platforms , as has take place in the casing of decentralized enforcement of the bloc ’s General Data Protection Regulation .
When it comes to the special set of DSA requirements for VLOPs — which covers result like algorithmic transparency and mitigation of systemic risk in area like tike ’ mental health — the Commission is the sole enforcer .
Both marketplaces do still have a few months ’ seemliness before submission with these additional obligations is await , though : Shein is due to submit its first hazard judgment report to the Commission in August , while Temu has until the remainder of September to charge its first risk report .
Still , with these early RFIs the Commission looks keen to be on the front foot when it come to assessing those future report — and also peachy to be seen responding fleetly to what are already wide raised consumer tribute concern .
Shein and Temu have been give until July 12 to bring home the bacon the quest information . The EU aver it will then “ value next steps ” , noting this “ could entail ” the stately opening of proceedings , i.e. if it suspect any infringements of the rules .
Shein and Temu were contacted for comment on the Commission ’s RFIs .
A Shein spokesperson sustain it has received the postulation for information from the Commission , say us the company is “ working to promptly address it ” . “ We deal the Commission ’s goal of insure that consumers in the EU can betray online with peace of mind , and we will continue working tight with the Commission to ensure our compliance with the Digital Services Act , ” they tote up .
A Temu spokesperson also told us : “ We are cooperate to the full with the EU . We ’d also wish to reiterate that we are fully committed to follow with all applicable laws and regulations in the markets where we lock . ”
