As Temu rises to become one of the top shopping apps in Luxembourg, the platform faces scrutiny from the European Commission over allegations of selling unsafe products and employing questionable business practices.

Online shopping platform "Temu" is booming, with the company itself claiming that is has over 92 million monthly users. In Luxembourg, the shopping app is the fifth most downloaded application.

The reasons for this success seem evident. On Temu, shoppers can purchase seemingly everything, including electronics, clothes, toys, etc. All wares are sourced directly from Chinese wholesalers, leading to almost unbelievably low prices. In fact, many items are available for less than €10.

However, the platform currently finds itself the target of an EU investigation. In late October, the European Commission initiated formal proceedings against Temu. As a so-called "very large" online platform with over 45 million monthly users, Temu has to adhere to the Digital Services Act (DSA), which has been in force since February. The DSA obligates platforms to crack down on the spread of illegal content.

Gamified shopping and safety risks

The investigation against Temu focuses on several aspects. In terms of its products, Temu is accused of selling items that are not in line with EU safety standards, such as toys that may present a choking hazard to young children.

The company has also been criticised for employing design elements on its platform that may have an addictive effect on users. Shoppers are, for instance, frequently encouraged to participate in various games and are given purchase suggestions based on what has been referred to as an opaque algorithm.

Consumer protection associations are critical of Temu and accuse the platform of pressuring users into impulse purchases with fake discounts and deadlines.

Meanwhile, local retailers struggle to compete against the online giant from China and its extremely cheap prices. Temu, alongside similar platforms, is also suspected of deliberately circumventing customs. Items up to a value of €150 are not subject to customs fees when they arrive by plane in the EU. Temu allegedly deliberately splits up its orders to always remain below this threshold.

Martine Hansen: "Not much we can do"

Minister for Consumer Protection Martine Hansen recently responded to a parliamentary question on the subject and acknowledged that there is not much Luxembourg can do on its own against parcels that are potentially not in line with legal standards or have been improperly declared.

While several Luxembourg authorities, including customs, the Luxembourg Institute of Standardisation, Accreditation, Safety and Quality of Products and Services (ILNAS), the Luxembourg Consumer Protection Association (ULC), and the Competition Authority, are involved in the case, Minister Hansen noted that both ILNAS and customs are only able to carry out random checks. In 2023, the Luxembourg customs authority recorded 1,314 import irregularities over the course of 15,722 checks. However, Hansen pointed out that orders are frequently delivered to Luxembourg through other EU countries, meaning that they are out of the purview of the national customs authority.

The ULC responds to complaints, but due to the fact that items sold on Temu are extremely cheap, many customers decide against launching such proceedings when they encounter problems. Nevertheless, the Ministry recommends consumers to report issues to the ULC and the platform itself, as official complaints will be considered as part of the investigation at EU level.

Temu's response

Temu responded to the article by emphasising that it would seek to consider the interests of consumers and comply with applicable regulations. The company also clarified that it would take into account the concerns of the European Union and that it would be willing to cooperate with the relevant authorities. Additionally, Temu would implement a rigorous quality control process to remove non-compliant products from its range. It also assured that there would be no splitting of orders to circumvent customs controls, with such practices being justified only for logistical reasons. Finally, Temu stated that its competitive prices would result from the absence of intermediaries.