LONDON, UK: Chinese online retailer Temu has been fined 200 million euros (US$232 million) by the European Union after regulators found the platform failed to adequately protect consumers from unsafe and illegal products, including hazardous toys and electronic goods.

The penalty was announced on May 29 following an investigation by the European Commission under the bloc's Digital Services Act (DSA), which requires large online platforms to better safeguard users from harmful products and content.

The EU said Temu exposed consumers to a "high risk" of unsafe goods sold through its platform, including baby toys and electronic chargers that did not comply with European safety standards.

The fine marks the second major penalty issued under the DSA, after Elon Musk's social media platform X was fined $120 million last year.

Temu said it disagreed with the decision and called the penalty "disproportionate."

"The decision relates to the commission's first DSA evaluation of Temu in 2024 and does not reflect the current state of our systems," the company said in a statement.

"Temu engaged constructively with the Commission throughout the process and has since taken further steps to strengthen risk assessment, platform governance, and user protection," the statement added.

Owned by PDD Holdings, which also operates the Chinese e-commerce platform Pinduoduo, Temu has grown rapidly by selling low-cost goods, ranging from clothing to household products, shipped directly from China. The platform has about 92 million users across the European Union.

According to the European Commission, Temu failed to properly identify and assess the risks posed by illegal or unsafe products sold through its marketplace.

Investigators conducted a "mystery shopping exercise" and found multiple "non-compliant" products, including electronic chargers that failed basic safety tests and baby toys containing excessive levels of chemicals or detachable parts that posed suffocation risks.

European Commission Executive Vice-President Henna Virkunnen said Temu's failures represented a serious breach of the EU's digital rules. "Risk assessments are ‘not box-ticking exercises,'" Virkunnen said in a prepared statement.

"Temu's risk assessment underestimates concrete risks, lacks specificity, is not grounded in solid evidence, and is not comprehensive," she added. "It leaves regulators, users, and the public in the dark about the true scale of potential harm posed by illegal products sold on Temu. Now it is time for Temu to comply with the law."

The commission said Temu must submit an "action plan" by the end of August outlining how it will fix the problems identified during the investigation.

Failure to comply could result in additional daily, weekly, or monthly fines, EU officials said.