EU investigates Shein’s ‘addictive design’ and illegal products

The European Union has opened a formal investigation into Shein after French regulators found listings for Shein.Sex dolls that look like children“on the retail platform last year. The investigation will evaluate whether the systems used by Shein to curb sales of illegal products are compliant with the EU’s Digital Services Act (DSA), according to European Commissionincluding “content that could constitute child sexual abuse material.”

The committee will also examine the transparency of Shein’s content recommendation systems, and concerns about the retailer’s “addictive design,” including programs that award points and other rewards to shoppers.

“In the EU, illegal products are banned – whether they are on store shelves or in the online market,” EU Chief Technology Officer Hina Virkkonen said in the announcement. “The Digital Services Code keeps shoppers safe, protects their well-being and provides them with information about the algorithms they interact with. We will evaluate whether Shein respects these rules and is responsible.”

Companies can be fined up to six percent of their annual global revenue for DSA violations, putting Shein at risk of fines of $2.2 billion, based on its total revenue. $37 billion revenue for 2024. In a statement to The Wall Street JournalShein said it has made significant investments in strengthening DSA compliance in recent months, such as improving detection tools and safeguards around age-restricted products.

“We share the Commission’s goal of ensuring a safe and reliable online environment and will continue to engage constructively in this action,” Sheen said.