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Business News/ Markets / Stock Markets/  Chinese Retailer Temu Under Fire From European Consumer Groups
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Chinese Retailer Temu Under Fire From European Consumer Groups

wsj

Temu, the discount retailing app owned by Chinese e-commerce giant PDD Holdings, is facing consumer complaints that its business practices violate a new online content law in Europe.

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Temu

Temu, the discount retailing app owned by Chinese e-commerce giant PDD Holdings, is facing consumer complaints that its business practices violate a new online content law in Europe, one of the company’s fastest-growing markets.

The European Consumer Organization on Thursday filed a 26-page complaint with the European Commission alleging that some of Temu’s business practices are in breach of requirements regarding product traceability, among others.

The organization, a Brussels-based collection of regional consumer groups known as the BEUC, said in a statement that Temu fails to provide enough information about sellers of the products on its platform to determine whether products meet European Union safety requirements.

It also said the company uses “manipulative techniques" to “get consumers to spend more than they might originally want to, or to complicate the process of closing down their account."

The BEUC said those practices contradict the EU’s Digital Services Act. The legislation, a sweeping new law aimed at boosting competition from smaller companies in the areas of digital advertising, online search and app ecosystems, came into full effect earlier this year.

Temu, responding to a request for comment, said it is taking the complaint “very seriously" and will “study it thoroughly." It said it is “committed to full compliance with the laws and regulations of the markets where we operate."

First launched in the U.S. in 2022, Temu quickly made a splash with its affordable prices and strong social-media presence despite the increasing geopolitical tensions faced by Chinese companies. In less than two years, it became the U.S.’s second-most popular shopping app by monthly users after Amazon.com.

More recently, the company entered European markets in pursuit of new growth. It said it had about 75 million monthly active users in the EU for the six months ended March.

The Wall Street Journal reported earlier this week that the bargain app has been shifting business priorities to Europe and other countries, in part due to mounting political troubles faced by TikTok, the video-sharing platform owned by China’s ByteDance that is currently facing legislation calling for its ban or divestment in the U.S.

As Chinese e-commerce retailers grow more popular globally, they have faced increasing scrutiny on how they handle content on their platforms. Shein, another Chinese-founded fashion app, which has 108 million monthly users in the EU, later this year will face stricter rules under the Digital Services Act to fight illegal and harmful content and counterfeit products, the European Commission said last month.

The BEUC, an umbrella organization for consumer groups in 31 countries, said that 17 of its members had also filed the complaint with their respective national authorities in France, Italy, Spain and other countries.

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