European Commission notifies Shein as VLOP under Digital Services Act

Shein has an average of more than 45 million monthly users in the European Union (EU). This user number, which Shein has communicated to the Commission, is above the DSA threshold for designation as a VLOP.

Following the designation, Shein will now have to comply with the most stringent rules under the DSA within four months of its notification, i.e. by the end of August, such as the obligation to adopt specific measures to empower and protect users online, including minors, and duly assess and mitigate any systemic risks stemming from their services.

These additional obligations include more diligent surveillance of illegal products; enhanced consumer protection measures, and more transparency and accountability, a release from the Commission said.

Shein needs to diligently analyse the specific systemic risks with regard to the dissemination of illegal content and products and from the design or functioning of its service and its related systems. Risk assessment reports will have to be provided to the Commission four months after the notification of the formal designation and thereafter once a year.

Shein must put in place mitigation measures to address risks, such as the listing and sale of counterfeit goods, unsafe products and items that infringe on intellectual property rights.

These measures can include adapting the terms of service, enhancing user interface design for better reporting and detection of suspicious listings, improving moderation processes to swiftly remove illegal items, and refining its algorithms to prevent the promotion and sale of prohibited goods.

Shein must reinforce its internal processes, resources, testing, documentation and supervision of any of the activities linked to the detection of systemic risks, the release said.

The yearly risk assessment reports by Shein must specifically evaluate any potential adverse effects on consumer health and safety, with an emphasis on the physical and mental well-being of underage users.

Shein is required to structure its platform, including user interfaces, recommendation algorithms and terms of service, to mitigate and prevent risks to consumer safety and well-being.

Measures must be implemented to protect consumers from purchasing unsafe or illegal goods, with particular focus on preventing the sale and distribution of products that could be harmful to minors.

Shein needs to ensure that its risk assessments and compliance with all the DSA obligations are externally and independently audited every year.

It needs to publish repositories of all the advertisements served on its interface and will have to give access to publicly available data to researchers, including to vetted researchers designated by Digital Services Coordinators.

Shein has to appoint a compliance function and be subject to an external independent audit every year.

Fibre2Fashion News Desk (DS)