Buying products can be a big win or a major disappointment; there’s no in-between. But what’s more disappointing is buying products from online retailers who promote low costs without considering the environmental and social impacts.
Just like SHEIN, Temu is the latest fast fashion no-brainer. Thanks to promotions on YouTube, TikTok, and recent Super Bowls, Temu has reached a wider audience in the online shopping sphere, creating greater demand due to its rapidly changing new items and low costs.
However, with their rise come complaints. Recently, Temu has faced joint complaints from consumer associations in 17 different countries. What’s more surprising about this case? Complaints against e-commerce platforms are common, but it’s rare for a platform to face joint complaints from consumer associations in so many countries.
According to a report by Sino News on May 16, 2024, Temu received a joint complaint from 17 European consumer advocacy groups. The European Consumer Organisation (BEUC) has filed a complaint with the European Commission, requesting that Temu be urgently designated as a “Very Large Online Platform” (VLOP) under the Digital Services Act (DSA). Consumer protection associations from 17 EU countries have submitted related complaints to their national authorities.
This means that Temu may have to comply with additional algorithmic transparency and accountability rules in the future, including reducing systemic risks.
Previously, the e-commerce platforms identified as “Very Large Online Platforms (VLOPs)” by the European Commission included Alibaba, Amazon, Booking.com, Google Shopping and Zalando.
The Beginnings of Temu in Europe
It is understood that Temu was only launched in Europe a year ago, but it has developed rapidly. According to the latest report, Temu’s monthly users have exceeded 75 million. This is a super success in the EU, which has a population of less than 450 million.
Temu entered its first European markets in April 2023. As of June 2024, they serve customers in all 27 European Union member states. Additionally, Temu operates a direct-from-factory online marketplace that connects consumers across more than 70 markets globally with cost-efficient manufacturers, offering general merchandise at competitive prices.
Their mission is to empower consumers from all walks of life with access to quality, affordable products. Just like SHEIN, Temu aims to attract customers from diverse backgrounds and income levels. These customers value the increased options for affordable, quality merchandise that Temu offers.
Unpacking Temu’s Problems: The Fast Fashion Giant Faces Global Consumer Complaints
Temu was complained by the European Consumer Organization, which represents 31 European countries and 45 regional consumer protection organizations, for violating the European Digital Services Regulations.
The main problems include that the products sold in the online stores on the platform do not match the descriptions of the suppliers, and it is suspected of collecting consumer privacy data, and the platform does not have strict management on this.
The European consumer group said Temu had failed to comply with the Digital Services Act, which obliges e-commerce companies to combat counterfeit products and false or incomplete information on their platforms.
Specifically, the European Consumer Rights Group and its 17 member groups argued that Temu used manipulative practices such as dark graphics to get consumers to spend more than they wanted and did not provide enough information on how it recommended products to consumers. In addition, there is insufficient product traceability on the Temu platform, opaque supplier information, and potential abuse of consumer privacy data.
Sandra Molenaar, manager of the Dutch Consumers Association said, “Temu is very popular in Europe, but its business practices are not honest. The company withholds a lot of information, which prevents consumers from making informed purchasing decisions. Customers don’t know whether the products they buy are safe. In addition, Temu is full of manipulative techniques to make consumers spend more money on the platform.”
Customers on Temu are shown more expensive alternatives after clicking on an item, which the Dutch Consumers Association said was not allowed. It also said it was too difficult for customers to close their accounts.
The European Consumer Organisation (BEUC) President Monique Goyens stressed in a public statement that although Temu has developed rapidly in the European market, its multiple suspected illegal actions have infringed on consumer rights and must be intervened by regulators. What’s more, BEUC warned that Temu may face the risk of a ban by the EU.
Furthermore, BEUC and its member organizations also said that Temu distorted or impaired consumers’ ability to make “free and informed decisions” when shopping online, violating the EU’s online content law.
Under the Digital Services Act, digital service platforms, including e-commerce, must quickly remove illegal content, be more transparent about how they use user data, and ensure the safety of online shopping.
Aside from the European consumer associations criticizing Temu. Last October 2023, the Italian Consumers Association Altroconsumo discovered that 9 of the 13 cosmetics purchased on the Temu platform did not contain an ingredient list or only provided a partial ingredient list.
Meanwhile, the Federation of German Consumer Organisations Verbraucherzentrale Bundesverband (VZBZ) has also begun investigating whether Temu is suspected of making misleading descriptions of the products it sells and misleading consumers with price discounts.
“Temu also often leaves consumers in the dark about who they are buying their products from,” said Monique Goijens, director general of Consumer Europe. “This lack of traceability prevents consumers from making informed decisions and knowing whether products comply with EU safety regulations.”
In addition to the EU, Temu also faces stricter scrutiny in the US and Asian markets. On April 5, 2024, the U.S. Department of Homeland Security issued a notice stating that it will more strictly review “minimum import duty-free packages” in the future, which are packages worth less than US$800 that are usually sent directly from overseas to U.S. consumers, including whether they violate the U.S. forced labor ban.
The target is directly aimed at Chinese cross-border e-commerce giants SHEIN and Temu. Last April 8, 2024, a Korean source revealed that Temu was being investigated by the Korea Fair Trade Commission (KFTC) for false advertising and unfair business practices.
Media reports said that since entering Korea in July last year, Temu has adopted strategies such as issuing cash coupons to attract new members, and has caused controversy for using roulette games and pyramid schemes. At the same time, consumers are still dissatisfied with its delivery delays and poor quality.
E-commerce Transparency: A Critical Issue
However, Temu has responded to the complaints and stated that it will conduct a thorough study and work with stakeholders. Temu expects to increase transparency and fully comply with all applicable laws and regulations by improving services and correcting any shortcomings.
“We have been actively adjusting our service to align with local practices and preferences, and we are committed to full compliance with the laws and regulations of the markets where we operate,” read the statement.
According to Temu’s statement, the app is a newcomer to Europe, having entered its first markets just over a year ago. They also said they have listened to feedback from customers, regulatory bodies, and consumer advocacy groups.
Competition in e-commerce is extremely fierce both at home and abroad, but, strategies that work domestically may not suit mature overseas markets due to stricter laws and political factors.
In China, many people have played Pinduoduo’s “bargain game,” which has even become a meme. However, Temu can’t use these methods abroad. Despite not using “inducement marketing” and “unfair competition” tactics, Temu still faces restrictions in Europe and the U.S. Low-priced but substandard products, coupled with political and interest conflicts, are significant obstacles to Temu’s stable development abroad.
What Australians Need To Know
As the landscape of e-commerce continues to evolve, Australians are more concerned than ever about where their products come from and how they impact both the environment and society.
This growing awareness has sparked a conversation around ethical shopping choices, especially when comparing global giants like Temu with local and sustainable options like Local Threads.
Temu is not only facing scrutiny in Europe but also in the US and Asian markets. As a rapidly expanding platform, Temu’s practices and the regulatory responses to them have global implications. Australian consumers should be aware of these issues when shopping on Temu, SHEIN, and other similar platforms.
The complaints highlight the importance of transparency, product safety, and ethical business practices in the e-commerce industry, which Temu fails to do so. By staying informed about these developments, Australians can make more educated decisions when choosing where to shop online, ensuring they support platforms that prioritize consumer rights and ethical practices such as the Local Threads.
Australian shoppers must remain vigilant and informed. Comprehensive training and certification from platforms like Local Threads, which emphasize ethical and sustainable shopping practices, provide an alternative to the pitfalls often associated with large e-commerce entities.
Local Thread Brand Solution Management (LTBSM) certifications guarantee a commitment to quality and consumer trust, aspects that are sometimes overlooked by global giants who focus on volume over value.
Local Threads supports local Australian artisans and manufacturers as all products are designed and manufactured in Australia, supporting the local economy.
If you want to enhance your brand and upgrade your ethical and sustainable promise to your customers, contact Local Threads Brand Solution Management to go through a thorough screening and uphold ethical standards in fashion.
So, the next time you consider clicking that “Buy Now” button, think about the implications—not just for your wallet but for wider consumer rights and ethical shopping.
Whether it’s understanding your rights under EU Consumer Protection Laws or evaluating the impact of the Digital Services Act on cross-border e-commerce, being an informed shopper is your best defense against potential pitfalls in the evolving digital marketing landscape.
