SHEIN Faces More EU Questions Over DSA Compliance

EU Intensifies Scrutiny of Shein with New Information Request

Following increased attention from the European Union regarding fast-fashion retailer Shein, the EU’s executive body has issued a further request for information (RFI) to the e-commerce platform, operating under the provisions of the Digital Services Act (DSA).

DSA Compliance and Algorithmic Transparency

The European Commission is responsible for monitoring how larger platforms adhere to specific DSA regulations. These include requirements concerning algorithmic transparency, notably the obligation to provide researchers with data access for the study of systemic risks.

Although penalties for failing to comply can potentially reach up to 6% of a company’s global annual revenue, the EU has not yet imposed any DSA fines on designated very large online platforms (VLOPs) or search engines (VLOSE), despite initiating investigations and sending numerous information requests.

Details of the Latest RFI

The current RFI directed to Shein encompasses several key areas. These include requests for internal documents and more comprehensive details regarding risks associated with the presence of unlawful content and goods on its marketplace.

Furthermore, the Commission seeks information on the transparency of Shein’s recommender systems and the accessibility of data for qualified researchers. Details on measures taken to mitigate risks related to consumer protection, public health, and user wellbeing are also requested.

The request also covers the protection of users’ personal data. Shein is required to provide a response to the RFI by February 27th.

Concerns Regarding Low-Cost E-Commerce

Shein was officially designated as a VLOP in April of the previous year. EU legislators have voiced concerns about potential risks arising from low-cost e-commerce marketplaces, such as the circulation of dangerous or counterfeit products, and the environmental impact of inexpensive, low-quality merchandise.

The influx of low-quality goods into the EU also raises competition concerns for the bloc. On Wednesday, the Commission unveiled a strategy to address these issues. However, much of the content presented in the Communication on Safe and Sustainable E-Commerce is still subject to agreement by co-legislators before implementation.

Ongoing Efforts and Existing Regulations

Customs reforms represent a key component of the strategy being advocated by EU lawmakers, but these changes require the approval of Member States. Commission officials emphasized that existing legislation already applies to low-cost e-commerce platforms, covering product standards, consumer protection, and the bloc’s online governance framework.

Enforcement of relevant aspects of the DSA, including restrictions on anti-consumer practices like dark patterns, falls under the Commission’s oversight of VLOP compliance.

Pressure and Further Investigations

The announcement of another RFI for Shein appears to be a deliberate effort to maintain pressure and demonstrate that the EU is actively taking steps. Commission representatives declined to address inquiries regarding why enforcement hasn’t been escalated further, given the concerns raised regarding product safety and consumer protection.

Investigations into AliExpress and Temu

While no formal investigations have been launched against Shein despite multiple requests for information, the EU has been conducting a DSA probe into AliExpress since March of last year. This probe examines risk mitigation, content moderation, ad transparency, algorithmic accountability, trader traceability, and data access for researchers.

Additionally, a probe was initiated on Temu in October 2024, with suspicions that the platform is violating DSA rules concerning the sale of illegal products, addictive design features, algorithmic transparency, and researcher access to public data.

Shein’s Response

In response to the RFI, Shein spokesman Jakub Adamowicz provided a statement via email. The company affirmed its alignment with the Commission’s objective of ensuring a secure online shopping experience for EU consumers and stated it has received the request and is working to address it promptly.

This report has been updated to include a statement from Shein. A correction has also been made regarding the Temu investigation, which began in October 2024.