Cheap Fake Potato: The European Commission has concluded the first part of its investigation into Temu's business practices. The Chinese online marketplace for low-cost goods is not doing enough to prevent the sale of illegal products, thereby violating a key requirement of Europe's new rules for large digital marketplaces.
The European Commission has announced its second fine ever against an international company for violating the Digital Services Act. Temu, the controversial Chinese online marketplace for low-cost products, was found to have played a role in the sale of illegal goods that could have harmed consumers in the European Union.
The EC fined Temu €200 million (about $232 million), stating that the company failed to properly assess the risks associated with unlawful products sold through its platform. Brussels authorities said European customers were likely encouraged to purchase illegal goods, as the platform is saturated with low-cost knockoffs that are not effectively filtered.
Although the investigation began in 2024 and is still ongoing, the EC said it had gathered sufficient evidence to impose an initial fine. According to regulators, the company provided a generic risk assessment that lacked specific analysis of its own platform and did not adequately reflect its reporting or testing efforts.
Furthermore, Temu underestimated how frequently illegal goods were being offered to European customers. A "mystery shopping" investigation conducted on behalf of the Commission found that a significant share of products on Temu would fail basic safety tests. Affected items reportedly included baby toys containing unsafe levels of hazardous chemicals, posing potential safety risks to children.
Temu also did not conduct a serious assessment of its platform's design. The EC said the Chinese marketplace was effectively encouraging the sale of illegal goods through promotional programs advertised by influencers affiliated with the platform.
Under the DSA, Temu and other "very large" online platforms are required to assess potential systemic risks to consumers and adopt appropriate mitigation measures when such risks are identified.
According to the EC, the lack of a proper risk assessment constitutes a significant violation of the DSA. The €200 million fine was determined based on the nature of the violation, the number of affected EU users, and the duration of the misconduct. Temu now has until August 28 to submit an "action plan" to bring the platform into compliance with EU regulations, as required under Article 75 of the DSA.
Without an adequate compliance plan or meaningful corrective action, the Chinese company could face additional periodic fines.
In a statement to Reuters, Temu said it was willing to cooperate with the European Commission. The company also argued that the 2024 assessment cited by Brussels no longer reflects how the ecommerce platform currently operates.
Companies found to be in violation of the DSA can face fines of up to 6% of their annual global revenue. In 2025, the European Commission imposed its first DSA-related fine on Elon Musk's X platform. In that case, cooperation was reportedly not part of the strategy.
Europe fines Temu $232 million over illegal and unsafe product listings
