EU investigation into Shein over sale of illegal products

The European Commission has initiated a formal investigation into Shein, the Chinese online retail platform, focusing on concerns regarding its platform design and the potential sale of illegal products. This inquiry, launched under the Digital Services Act (DSA), follows reports of illicit items being offered on the site, including products resembling child sexual abuse material.

Investigation Details

Addictive Design Concerns

The investigation will assess the risks associated with Shein’s platform design, specifically examining features that incentivize continuous engagement, such as reward points and other incentives. The Commission will evaluate the systems Shein has in place to mitigate these risks.

Illegal Product Sales

A key focus of the inquiry is Shein’s processes for preventing the sale of illegal products within the European Union. This includes a specific examination of content that could be considered child sexual abuse material, such as the sale of sex dolls with a child-like appearance. France’s consumer watchdog initially reported the sale of these dolls in November, prompting Shein to announce a ban on all sex dolls on its platform.

Transparency of Recommender Systems

The European Commission will also scrutinize the transparency of Shein’s recommender systems – the algorithms that suggest products to users. Under the DSA, Shein is required to disclose the main parameters driving these recommendations and offer users at least one option that isn’t based on personalized profiling.

Did You Know? The investigation is being conducted with the involvement of Coimisiún na Meán, the Irish media regulator, as Shein’s European headquarters are located in Ireland.

Gathering Evidence

Following the formal opening of proceedings, the Commission will continue to gather evidence. This could involve requesting additional information from Shein and other relevant parties, as well as conducting monitoring activities and interviews.

Shein’s Response

Shein has stated that it takes its obligations under the Digital Services Act seriously and has consistently cooperated with the European Commission. The company claims to have invested significantly in measures to strengthen its DSA compliance, including systemic-risk assessments, enhanced protections for younger users and ongoing efforts to create a safe user experience.

Shein also highlighted its accelerated rollout of safeguards around age-restricted products and its engagement with the Commission on deploying an age-assurance solution across the EU, utilizing third-party technology to balance compliance with both minor protection and privacy requirements.

Expert Insight: The European Commission’s action signals a growing willingness to enforce the Digital Services Act, particularly concerning large online marketplaces. This investigation could set a precedent for how the DSA is applied to address concerns about illegal content and potentially manipulative platform designs.

Potential Outcomes

The outcome of the investigation is currently uncertain. If the Commission determines that Shein is not complying with the DSA, it could impose significant penalties. This proves also possible that the Commission could require Shein to implement specific changes to its platform and its content moderation practices. Further proceedings could also be initiated.

The Commission has emphasized that the opening of the investigation does not predetermine the outcome or any future actions it may take.

Frequently Asked Questions

What prompted this investigation?

The investigation was prompted by preliminary analyses of risk assessment reports provided by Shein, replies to formal requests for information, and information shared by third parties, following reports of illegal products, including those resembling child sexual abuse material, being sold on the platform.

What is the Digital Services Act?

The Digital Services Act (DSA) is a European Union regulation designed to keep shoppers safe, protect their wellbeing, and empower them with information about the algorithms they are interacting with. It requires online platforms to take steps to address illegal content and mitigate risks associated with their services.

What has Shein said in response?

Shein has stated that it takes its obligations under the DSA seriously and has always cooperated fully with the European Commission, and will continue to do so. The company says it has invested in measures to strengthen its compliance, including enhanced protections for younger users.

As regulators increasingly scrutinize the practices of large online marketplaces, how might this investigation influence the broader e-commerce landscape?