On Tuesday, February 17, the European Union announced an investigation into the online retail giant Shein under the European Digital Services Act (DSA). The reason for the investigation is that Shein is alleged to be selling children’s sex dolls and weapons, the platform is said to have addictive designs, and lacks transparency in user-generated content and product recommendation systems.
The EU stated that the three main focuses of this investigation are Shein’s existing illegal products (unsafe or non-compliant weapons, toys, clothing, cosmetics, and electronics), prevention systems for addictive designs, platform loyalty points and gamified reward mechanisms, and details of the platform’s personalized content recommendation algorithm.
The European Commission expressed concerns that addictive features could have negative effects on users’ mental and physical health as well as online consumer protection. They pointed out that Shein’s recommendation system lacks transparency and may not meet the transparency requirements of the EU Digital Services Act. An EU official stated that the platform is filled with too many illegal products, and there are suspicions that Shein’s system is not effectively preventing the sale of illegal products.
Recently, Shein opened its first physical store in Paris. EU officials clarified that this investigation is independent of the French investigation and various violations assessments conducted by consumer protection agencies. It is a comprehensive investigation that goes beyond the specific incidents in France.
The final decision by the EU is expected to be announced later this year. The European Commission emphasized that initiating formal procedures does not predict the outcome of the investigation, and there is no set deadline for the completion of this investigation. Reopening the investigation does not necessarily mean that the platform services will be banned, but if Shein continues to violate regulations, the ultimate consequence could be a shutdown.
In April 2024, the EU initiated an investigation into Shein for compliance issues under the Digital Services Act. The EU considers Shein’s risk of selling non-compliant products to be high. EU Justice Commissioner Michael McGrath had previously expressed shock at some of the toxic and hazardous products sold by Shein, such as baby pacifiers that could cause choking and clothing containing chemicals banned by the EU.
In November of last year, the French government’s investigation revealed that Shein was selling sex dolls resembling children, leading to a temporary suspension of Shein’s services for three months. They called on the European Commission to crack down on the sale of these child-like sex dolls on the Shein platform.
Subsequently, Shein removed the related products and ceased the sale of sex dolls globally. During a court hearing in Paris in December, the French government’s attorney stated that Shein must implement age verification and filtering mechanisms to prevent minors from accessing adult content.
Last year, Pinduoduo’s overseas version, Temu, faced allegations of insufficiently evaluating the risk of illegal product sales on its platform, thus violating the Digital Services Act. Currently, the EU is also investigating DSA compliance on international platforms like AliExpress under the Alibaba Group, Facebook, Instagram, Xbox, and TikTok.
Shein is one of the world’s largest online platforms operating in over twenty countries, founded in China in 2012 and currently headquartered in Singapore. In a statement, Shein expressed its willingness to cooperate with the investigation and stated that it has invested significant resources to ensure compliance with relevant regulations.
According to the EU Digital Services Act, all platforms must comply with the regulations, failure to do so could result in fines of up to 6% of their global turnover, with serious and repeated violations potentially leading to operational bans.