Due to "Hazardous and Counterfeit Products".. Europe Fines "AliExpress" $627 Million

SadaNews - The European Commission has imposed a record fine of 550 million euros ($627 million) on the Chinese e-commerce platform "AliExpress," after its investigation concluded that the platform failed to adequately assess and mitigate the risks associated with the sale of illegal, hazardous, and counterfeit products within the European Union.

This is the largest fine imposed so far under the European Digital Services Act.

The Commission stated that "AliExpress" did not establish an effective system for detecting and removing non-compliant goods, and it downplayed the gap between the number of employees assigned to review products and the large workload on the platform, which weakened its ability to handle the risks associated with its scale of operations.

Investigations revealed that the product compliance verification mechanisms were vulnerable to circumvention, allowing some merchants to misclassify their goods to subject them to less stringent requirements, while large quantities of non-compliant products, including unsafe toys and hazardous cosmetics, remained available for sale for weeks after being discovered.

The Commission also found that the platform did not effectively enforce sanctions against non-compliant merchants, allowing some stores that displayed illegal products to continue operating even after being penalized.

It determined that the trademark licensing verification system was not robust enough to prevent merchants from bypassing controls and offering counterfeit products.

Identifying and Addressing Risks

Helena Verkoenen, the Vice President of the European Commission for Technological Sovereignty, Security, and Democracy, stated that the proliferation of counterfeit clothing, unsafe toys, and hazardous cosmetics is not an inevitable outcome of online shopping, but rather reflects "AliExpress"'s failure to meet its legal obligations, emphasizing that the platform's scale does not exempt it from systematically identifying and addressing risks.

The Commission has given the platform until October 20 to submit an action plan detailing the measures it will take to address the violations, and failure to comply with the decision or delays in implementing the required measures may lead to additional periodic fines.

"AliExpress" Objects

For its part, "AliExpress" stated that it does not agree with the decision, describing the size of the fine as "disproportionate" and not reflective of the compliance framework it has developed or the improvements it has made to its risk assessment systems, product safety, and consumer protection.

It added that it is reviewing the decision and considering its options, according to the Associated Press.

The company, which is part of the Chinese "Alibaba" Group, affirmed that it has invested significant resources to meet its obligations since the Digital Services Act came into effect, while the Commission stated that the violations on which the decision is based persisted at least until June 2025.

The Commission classifies "AliExpress" as a very large online platform under the Digital Services Act, with an average of about 104.3 million monthly active users in the EU, subjecting it to the most stringent obligations concerning system risk assessment and consumer protection.

Initiation of Investigation

The Commission initiated formal proceedings against "AliExpress" in March 2024 to verify its compliance with rules regarding risk management, content oversight, handling user complaints, advertising transparency and recommendation systems, trader traceability, and data availability for researchers.

In June of last year, the Commission preliminarily concluded that the platform had not allocated sufficient resources for product oversight systems and had not effectively imposed sanctions on repeat offending traders, and that proactive monitoring systems were suffering from failures that allowed traders to circumvent them.

At that time, the Commission accepted binding commitments made by "AliExpress" to enhance the detection of illegal products, combat hidden links used to market counterfeit goods, improve reporting and complaint mechanisms, verify trader identities, ensure advertising transparency and recommendation systems, and provide data to researchers.

The new fine does not nullify those commitments, a breach of which could lead to additional penalties.

Chinese Platforms

This fine comes less than two months after the EU imposed a 200 million euro ($228 million) fine on the Chinese e-commerce platform "Temu," after the Commission accused it of failing to conduct an accurate risk assessment related to the spread of illegal products through its platform.

The Commission found in the "Temu" case that a high percentage of chargers purchased during undercover tests failed to meet basic safety requirements, and that children’s toys tested contained chemicals exceeding legal limits or detachable parts that could cause choking. The platform was given until August 28 to submit a correction plan.

In February, the Commission opened a separate official investigation into the Chinese fashion platform "Shein," which includes the effectiveness of its systems in preventing the sale of illegal products, characteristics that may encourage addictive use, and transparency of its product recommendation systems to users. No final decision has been issued in this investigation yet.

The Digital Services Act allows the Commission to impose fines of up to 6% of the total annual global revenue of non-compliant platforms, along with periodic fines and enhanced oversight measures when corrective actions are not implemented.