The Digital Services Act in action: combatting illegal and unsafe products

With the development of online marketplaces, combating illegal and unsafe products reaching EU consumers is not easy. In recent years, online platforms such as Temu, which offer heavily discounted goods that often directly ship from China, have become popular with consumers.

Temu first came under the 'spotlight' when BEUC- The European Consumer Organisation and national consumer protection organisations initiated an enforcement campaign against Temu (see our report here).

Then, in May 2024, the EU Commission designated Temu as a Very Large Online Platform under the Digital Services Act (DSA), which conferred obligations on Temu to assess and mitigate any systemic risks stemming from its services. 

Following this, in October 2024, the Commission opened formal proceedings to assess whether Temu may have breached the DSA in areas linked to the sale of illegal products, the potentially addictive design of the service, the systems used to recommend purchases to users, as well as data access for researchers. In July 2025, the Commission published preliminary findings that Temu was indeed in breach of the obligation under the DSA to properly assess the risks of illegal products being disseminated on its marketplace, and continues investigation in the other identified areas of concern.

Testing by consumer organisations has revealed that many parcels from Temu and similar online platforms contain products that are not compliant with EU consumer law and are even potentially harmful to consumers. These include, for example, clothing that contains banned chemicals, phone chargers that can explode, and balloons for children that contain illegal chemicals.

In an interesting and informative interview for Deutsche Welle, Augustin Reyna, Director General of BEUC, explains these developments (see here). 

New action by BEUC: Tamig Temu

We all like a good deal! However, those of us who know (a bit more) about consumer rights and consumer law are aware that cheap goods and services often come at a high price, by infringing our consumer rights.

TEMU, the online marketplace that has gained popularity in the EU, has recently came under the spotlight. This month, BEUC, The European Consumer Organisation, has taken a significant step by initiating an enforcement campaign against TEMU, named 'Taming Temu'. The campaign is a response to TEMU's violation of its consumer protection obligations under the Digital Services Act. The identified breaches include:

•   failing to provide sufficient traceability of the traders that sell on its platform and thereby to ensure that the products sold to EU consumers conform to EU law.
•   using manipulative practices such as dark patterns to get consumers, for example, to spend more than they might originally want to, or to complicate the process of closing down their account.
•   failing to provide transparency about how it recommends products to consumers.

BEUC filed a complaint with the European Commission, while 17 of BEUC’s members filed the same complaint with their competent national authorities. For a more efficient and effective enforcement action, BEUC asks the Digital Services Coordinators of each country (national authorities responsible for enforcing the EU’s Digital Services Act) to transfer the complaints to the Irish authority, TEMU’s country of registration. It would then be up to the Irish authority to take swift action to prevent further consumer harm.

Given the fast growth in the number of TEMU users, it is possible that the platform would pass the threshold of 45 million users per month, which would then classify it as a ‘very large online platform’ and grant the Commission competence to enforce the Digital Services Act.

Given that consumer law enforcement, especially against large platforms, was less effective in the past (see for instance our reports here and here), a concerted EU action is a welcome solution.

Throwback to last summer: the notion of producer clarified by the Court (C-264/21, Keskinäinen Vakuutusyhtiö Fennia)

Our last two posts concerned the notion of the consumer in the context of two judgments issued earlier this week (CJEU confirms..., Financial benefits...). Today we would like to draw your attention to an older judgment, which we have not yet had a chance to comment on, C-264/21, Keskinäinen Vakuutusyhtiö Fennia. The ruling similarly involves one of the basic concepts of consumer law - this time the concept of the producer. 

Facts of the case

The preliminary reference was made by a Finish court in the context of a dispute between an insurer and Koninklijke Philips, a known Dutch corporation offering electronics. The background is unfortunate: a consumer bought a coffee machine and on the following day their house caught fire. The insurer paid for the damage and sought compensation from Philips under product liability law. The defendant argued, however, that it could not be considered a 'producer' of the defective product. While Philips' logo was visible on the product, the packaging also made clear that the coffee machine was manufactured in Romania by Saeco International Group SpA, a Philips subsidiary. Against this background, the referring court expressed its doubts whether the very fact that a person has put his trademark on the product or authorised it to be put on the product is sufficient to qualify that person as a producer, or whether additional criteria must be fulfilled.

No additional conditions required

To recall, pursuant to Article 3(1) of the Product Liability Directive (PLD) a 'producer' is defined as the manufacturer of a finished product, the producer of any raw material or the manufacturer of a component part and any person who, by putting his name, trade mark or other distinguishing feature on the product presents himself as its producer. The Court considered that definition to be formulated in a clear and unambiguous manner, noting that it can also include persons who are not involved in the process of manufacturing (para. 27). Referring to the objective of the directive, namely to protect the consumer, the Court concluded that the producer's definition should be given a broad interpretation (para. 31). By placing the liability of a person who presents himself as a producer on the same level as that of the actual producer, the EU legislature intended to ease the burden of having to determine the actual producer of the defective product (para. 33). Accordingly, it cannot be required that the person who has put his name, trade mark or other distinguishing feature on the product, or who has authorised those particulars to be put on the product, also present himself as the producer in some other way in order to be regarded as a 'producer'.

Lessons for online marketplaces?

The conclusion of the Court is not surprising considering the circumstances of the case at hand. Some parts of the reasoning are nevertheless interesting, keeping the broader landscape of market transactions in view. In particular, it is worth drawing attention to para. 34 of the judgment which is formulated as follows:

Furthermore, it should be noted that, by putting his name, trade mark or other distinguishing feature on the product at issue, the person who presents himself as a producer gives the impression that he is involved in the production process or assumes responsibility for it. Accordingly, by using such particulars, that person is effectively using his reputation in order to make that product more attractive in the eyes of consumers which, in return, justifies his liability being incurred in respect of that use.

The Court therefore acknowledges the importance of reputation in market transactions and links it to liability. This brings to mind other situations in which an involvement of a third party makes products appear more attractive/reliable, as in the case of online marketplaces. Article 6(3) of the Digital Services Act takes account of this very scenario, at least to some extent. Similarly, the potential liability of online marketplace providers has been the subject of discussions concerning product liability. However, the proposal for a new product liability directive, presented last year, provides for platform liability only in a narrow set of cases. It remains to be seen whether that liability will be extended as part of legislative negotiations. The reasoning of the Court in C-264/21, Keskinäinen Vakuutusyhtiö Fennia, could arguably support a more daring approach.

CMA's paper on algorithms & online platforms: comprehensive report on benefits and perils of AI regulation

The UK Competition and Market’s Authority recently published a report on the consequences of the online platforms’ use of algorithms (‘sequences of instructions to perform a computation or solve a problem’) for consumer protection and for competition (here). This report builds on the CMA’s 2018 paper on pricing algorithms (here). The report starts by highlighting that the increasing sophistication of algorithms usually means decreasing transparency. The CMA’s report acknowledges the benefits of algorithms to consumers, such as the possibility to save consumers’ time by offering them individualized recommendations. Additionally, algorithms benefit consumers by increasing efficiency, effectiveness, innovation and competition. However, the main goal of the report is to list (economic) harms caused to consumers as a result of algorithms.

The report highlights that big data, machine learning, and AI-based algorithms are at the core of major market players such as Google (e.g. their search algorithm) and Facebook (e.g. their news’ feed algorithm). The CMA also acknowledges that many of the harms discussed in this report are not new but were made more relevant by recent technological advances. Finally, the report acknowledges that the dangers brought by algorithmic regulation are even greater where it impacts consumers significantly (such as decisions about jobs, housing or credit).

The harms discussed in the report deal mainly with choice architecture and dark patterns (e.g. misleading scarcity messages on a given product or misleading rankings). Additionally, personalization is depicted as a particularly dangerous harm, since it cannot be easily identified and because it manipulates consumer choice without that being clear to consumers. Personalization is also worrying because it targets vulnerable consumers. In particular, the CMA is worried about possible discrimination as a result of personalization of offers, prices and other aspects.

Personalized pricing implies that firms charge different prices to different consumers according to what the firm (and their algorithms) think that the consumer is willing to pay. While this has some benefits – like lowering search costs for consumers, the CMA warns that consumers might lose trust in the market as a consequence of personalized pricing practices. While some personalized pricing techniques are well-known – such as offering coupons or charging lower prices to new customers, others are more opaque and harder to detect. Non-price related personalization is also described as potentially harmful, such as personalized search results rankings or personalized recommendation systems (e.g. what videos to show next). In particular, the CMA warns that these systems may lead to unhealthy overuse or addiction of certain services by consumers and to a fragmented understanding of reality and public discourse.

Additionally, the use of algorithms harms competition since it can exclude competitors (e.g. through platform preferencing, via ranking, of their own products). Through exclusionary practices, dominant firms can stop competitors from challenging their market position. A prominent example of this is that of Google displaying its own Google Shopping service in the general search results page more favorably than competitors that offer similar services. Finally, the CMA report zooms in on algorithmic collusion, or the use of algorithmic systems to sustain higher prices.

The report also highlights the obstacles brought by lack of transparency, particularly when it comes to platform oversight. The CMA warns that this lack of transparency and the misuse of algorithms may lead consumers to stop participating in digital markets (e.g. deleting social media apps). This justifies, in the CMA’s opinion, the regulators’ intervention. In particular, the CMA considers that regulators can provide guidance to businesses as to how to comply with the law or to elaborate standards for good practices. Overall, the report brings attention to the fact that many laws in place do not apply to algorithmic regulation, such as to discrimination in AI systems. Moreover, the CMA highlights that the application of consumer law to protect consumers against algorithmic discrimination is still an unexplored area.

The report ends with a call for further research on the harms caused by algorithmic regulation. The CMA suggests techniques to investigate these harms that do not depend on access to companies’ data and algorithms, such as enlisting consumers to act as ‘mystery shoppers’ or through crawling or scraping data from websites. The CMA also suggests specific investigation techniques when there is access to the code.

Overall, this is an extremely comprehensive report that not only explains the biggest consumer harms brought by AI regulation but also contains several practical examples, as well as concrete methodological suggestions for further research and for better enforcement. Definitely a recommended read for both academics and practionners alike.

New rules on personalised pricing and fake reviews: EP and Council agree on the reform of consumer law

Two weeks ago we informed about the stage of the legislative process concerning the New Deal for Consumers, focusing on the proposal on better enforcement and modernisation of directives on unfair commercial practices (UCPD), unfair contract terms (UCTD), consumer rights (CRD) and price indication (PID). Earlier this week, the Council and the European Parliament reached a preliminary agreement on the proposal.

As we explained in the earlier post, separate positions of the EP and the Council on the commented file did not fundamentally differ. Short-term agreement on the proposal, therefore, does not come as a huge surprise (particularly in this heated period before European elections). Both positions rejected the original proposal of the Commission to impose limitations on consumers' right of withdrawal set out in the CRD. Aside from that, Council members did not particularly like further harmonisation of procedural rules, proposed by the Commission. Since respective proposals had not been particularly far-reaching in the first place, it was enough to further water them down a little bit to reach a compromise at the Council level (the situation is more complex with the second New Deal proposal, to be discussed in detail during the upcoming conference in Amsterdam). The EP did not fundamentally oppose.

On the enforcement side, besides restating that the level of penalties imposed on the trader should, where possible, consider penalties imposed for the same infringement in other Member States as well as clarifying the threshold of fines, which Member States should provide for in their legislation (at least 4% of the trader's annual turnover or 2 million EUR, if the information on turnover is not available), the agreed text essentially reflects the Council's position. More apparent deviations from it can be seen at the substantive level. Two particularly interesting points concern online reviews and personalised prices.

Online reviews

At the initiative of the EP, new provisions have been added to the UCPD to address the problem of fake online reviews. Specifically, the catalogue of information which should be considered as material under Article 7 has been extended to cover information "whether and how the trader ensures that the published reviews originate from consumers who have purchased or used the product". Consequently, if a trader provides access to consumer reviews of products and omits this kind of information, his practice might be qualified as a misleading omission.

On top of that, two additional points related to reviews have been included in the UCPD's black list. The list, set out in Annex I to the Directive, ennumerates commercial practices which are in all circumstances considered unfair (hence, without the need to verify other criteria, such as the impact on an average consumer). The new black-listed practices include:

23b. Stating that reviews of a product are submitted by consumers who have actually used or purchased the product without taking reasonable and proportionate steps to check that they originate from such consumers.

23c. Submitting or commissioning another legal or natural person to submit false consumer reviews or endorsements, or misrepresenting consumer reviews or social endorsements, in order to promote products.

All in all, the amendments on consumer reviews seem to be a step in the right direction. Article 7 essentially requires that information about potential origin of reviews is disclosed, while the black list lays down the consequences of disclosing it in a misleading way. Of course, one can wonder whether the black list is the right place for a provision whose substantive scope is not readily apparent. Thus, de lege ferenda, additional guidelines as to what "reasonable and appropriate steps" actually are would be advisable.

Black list cont'd

For the sake of comprehensiveness, two further amendments to the black list contained in the new text should be mentioned briefly.

Firstly, the compromise version features yet another new black-listed practice proposed by the EP, namely "reselling events tickets to consumers if the trader acquired them by using automated means to circumvent any imposed limit on the number of tickets that a person can buy or any other rules applicable to the purchase of tickets" (new point 23a). This seems to address a highly specific problem, which must have been brought to MEPs attention by respective stakeholder groups.

Secondly, the amendment about paid results in search engine rankings, which had already been proposed by the Commission, has been adjusted slightly. According to the current version (new point 11a) "providing search results in response to a consumer’s online search query without clearly disclosing any paid advertisement or payment specifically for achieving higher ranking of products within the search results" shall be considered unfair in all circumstances. At first glance this might seem like a step back from the earlier wording, which referred to direct and indirect payments. Note, however, that a reference to both types of payment can still be found in the preamble. 

Information duty on personalised pricing 

As regards the amendments to the CRD, a particularly interesting development concerns the scope of  traders' information duties. In this respect, a new point has been added to the list of information to be communicated to consumers in contracts concluded at a distance (Article 6), namely information "that the price was personalised on the basis of automated decision making" (where applicable, of course).

The origin of this amendment can be traced back to the IMCO report, yet its final scope does not fully reflect the original one. Firstly, the substantive scope of the duty has been narrowed down compared to EP's text. More specifically, the IMCO report referred to information "whether and how algorithms or automated decision making were used, to present offers or determine prices, including personalised pricing techniques". By contrast, the compromise text is limited to personalised pricing, and excludes other algorithmic techniques, such as dynamic pricing (recital 45). Furthermore, it only requires traders to disclose whether, and not how the price had been adjusted.

Secondly, and more favourably to consumers, in the compromise text the new rule is framed as one of general information duties for distance contracts, and not just a specific rule for contracts concluded via online marketplaces, as originally proposed by the EP. As a result, under new rules, consumers should at least get an overview of the application of personalised pricing across the digital market. This, of course, under the assumption that competent authorities will find a way of enforcing these rules.

Price information cont'd

The agreed text also includes another new provision about communication of prices, this time as regards price reductions. More specifically, under the newly introduced Article 6a of Price Indication Directive "any announcement of price reduction shall indicate the prior price applied by the trader for a determined period of time prior to the application of the price reduction". What is more, "prior price" is defined in the subsequent section as "the lowest price applied by the trader during a period of time which may not be shorter than one month prior to the application of the price reduction". Exceptions from this rule would only concern goods which are liable to deteriorate or expire rapidly and products which had been on the market for less than 30 days. How exactly this rule is to be interpreted, and especially how it would apply in the digital markets where prices can be changed dynamically, is a matter for a future reflection (on the application of the current rules, see e.g. our earlier post More transparency on hotel booking websites?). 

Final remarks on the level of harmonisation

Last but not least, several remarks about the level of harmonisation under amended rules are in place. The readers may recall that the original file proposed to change the level of harmonisation of Consumer Rights Directive from full to minimum in case of contracts concluded as a result of unsolicited visits at consumer's home and during excursions organised by a trader. This supposedly was a response to the calls from the Member States which sought to provide consumers in those circumstances with a higher level of protection. Ultimately, however, a different course of action has been chosen. Rather that changing the level of harmonisation, a few additional regulatory choices have been introduced to the CRD. Specifically, Member States would be able to extend the withdrawal period for these types of contracts from 14 to 30 days. Additionally, Member States would also be able to derogate from some of the exceptions from the right of withdrawal for these types of contracts. This, however, does not mean that the CRD in its entirely will now be based on the principle of full harmonisation. As readers may recall, already now Article 5(4) allows Member States to adopt or maintain additional pre-contractual information requirements for contracts other than distance or off-premises contracts. And finally, not to be missed, the newly introduced Article 6a(2) also introduces a minimum level of harmonisation with respect to disclosure duties for online marketplaces.