EU fines Temu €200M over unsafe toys, non-compliant products

The European Union has handed Chinese-owned online retailer Temu a €200 million ($232 million) fine on Thursday for noncompliance of the bloc's Digital Services Act (DSA), a rule that compels the world's most popular digital platforms to conduct risk assessments of potential dangers to consumers.

It is the second such fine imposed under the EU's DSA on content, after Elon Musk's X platform received a €120-million fine in December. 

EU regulators said that consumers on Temu are "very likely to encounter illegal items" and that the retailer "seriously underestimated how often EU consumers are likely to" see such products.

"The company failed to diligently identify, analyze, and assess the systemic risks of illegal products being offered on its platform and the resulting harm to consumers in the European Union," the EU said, adding that Temu failed to properly assess the platform's design and how it "could amplify dissemination risks of illegal products."

Temu responded to the announcement by saying the fine was "disproportionate." Temu added that it was "carefully reviewing the decision and assessing all options available to us," insisting it worked "constructively" with regulators.

The Chinese retailer must now pay the fine and present a plan to the EU by August 28 to address the EU's concerns. Noncompliance would result in periodic penalty payments, but Temu also has the option to appeal the fine on EU courts, as Elon Musk chose to do.

'Mystery shopping' finds unsafe baby toys

The EU moved to fine Temu after its regulators carried out a "mystery shopping exercise," where they found a number of "non-compliant" products, including many electronic device chargers that failed basic safety tests.

Investigators also found a very high percentage of baby toys that posed safety risks. The compromised toys contained either chemicals at levels that exceeded safety limits or had parts that came off and could be a suffocation risk.

Temu enjoys high popularity in the EU, with 130 million users after entering the bloc's market in 2023. Consumers are drawn to it because it offers cheap goods shipped directly from sellers in China. 

But the EU began to take a closer look at Temu since October 2024 when an investigation found in July last year that Temu had breached landmark rules over the risks of illegal products.

"Temu is a very big player in the European market," EU tech commissioner Henna Virkkunen told reporters.

Virkkunen said that there was a threat that illegal products from Temu were easily available to too many EU consumers.

 EU scrutiny on China

The Temu fine comes a day before the EU executive is set to debate how the 27-nation bloc should approach China.

Top EU officials have sounded the alarm on the potential economic threat that China poses to the bloc, arguing that Europe must get tougher to defend its economy.

Europe has pushed back on Chinese efforts to invest in the bloc, with local businesses saying they face unfair competition from their heavily subsidized rivals.

On Thursday, the EU said it had opened an in-depth investigation into Chinese e-commerce giant JD.com's bid for a major German electronics retail group Ceconomy.  

The EU said the probe seeks to uncover whether state subsidies allowed the Chinese firm to offer a high price for Ceconomy and as such, distorting the outcome of the acquisition process.

Edited by: Zac Crellin