EU Hits Temu with Record €200 Million Fine for Failing to Tackle Illegal and Unsafe Products

The European Commission has imposed a €200 million fine on Chinese e-commerce platform Temu, marking the largest penalty issued to date under the Digital Services Act (DSA).

Announced yesterday, the decision concludes the first phase of a nearly two-year investigation into the platform’s handling of illegal and dangerous goods sold to European consumers.

Regulators found that Temu, which reaches approximately 130 million users across the EU and is designated as a Very Large Online Platform, did not adequately identify, analyse, or mitigate systemic risks related to non-compliant products on its marketplace.

Independent testing revealed high rates of problematic items, including phone chargers that failed basic safety standards and children’s toys containing excessive levels of harmful chemicals or presenting choking hazards.

The Commission emphasised that Temu’s 2024 risk assessment relied too heavily on generic industry-wide data rather than a thorough examination of its own platform operations. Officials also highlighted how the site’s design features – such as personalised recommendations, gamified shopping elements, and promotional tools – may have contributed to the spread of unsafe or illegal goods. EU representatives described proper risk assessment as the “backbone” of DSA compliance, signalling that platforms must treat these obligations with seriousness.

Temu entered the European market in 2023 and quickly gained popularity through ultra-low prices and a direct-from-manufacturer model. While this approach has brought affordable goods to millions, it has also drawn scrutiny over the influx of counterfeit, substandard, and unsafe products. The platform was designated a Very Large Online Platform after surpassing 45 million monthly active users, triggering stricter DSA requirements for systemic risk management and transparency.

This fine represents only the second enforcement action under the DSA, following a previous penalty against X (formerly Twitter). It stresses the EU’s broader effort to hold major online platforms accountable, regardless of their origin. The case also fits into wider EU-China trade tensions, including ongoing disputes over tariffs, subsidies, and fair competition in the digital space.

In response, Temu stated that it respects the goals of the DSA and the need for consistent rules in the digital economy. However, the company described the fine as disproportionate, noting that the decision centres on its earlier 2024 assessment and does not fully account for subsequent improvements to its systems, governance, and user protections. Temu said it engaged constructively with the Commission throughout the process and plans to submit a detailed action plan by the August 28, 2026 deadline. The company is considering its options, including a possible appeal.

Under the DSA, Temu must now present measures to remedy the identified breaches. The European Board for Digital Services will review the plan, after which the Commission will issue a final decision on implementation. Failure to comply could result in additional periodic penalties or further fines, potentially reaching up to 6% of the company’s global annual turnover.

The investigation into Temu remains active in other areas, including the effectiveness of its mitigation measures, the use of addictive design features such as countdown timers and reward mechanisms, the transparency of its recommendation systems, and data access for researchers. These strands could lead to additional findings or penalties in the coming months.

For European consumers, the ruling highlights ongoing concerns about balancing affordability with product safety. Consumer groups have long warned that ultra-cheap imports can sometimes bypass rigorous market surveillance, putting families at risk — particularly with items intended for children. At the same time, the decision sends a message that platforms must invest seriously in compliance rather than treating regulatory duties as secondary.

The fine arrives as the EU prepares other measures affecting low-value shipments from outside the bloc. From July 2026, the removal of the €150 de minimis threshold for duty-free imports is expected to add costs and scrutiny to packages from platforms like Temu, aiming to create a more level playing field for European retailers.

Temu’s rapid growth in Europe – from initial designation with around 45 million monthly users to current estimates near 130 million – illustrates both the appeal of its model and the challenges it poses for regulators. As one of the fastest expanding marketplaces, its experience will likely shape how the DSA is applied to other non-European platforms operating at scale.