Report: Shein to be Subjected to DSA Rules

Fast-fashion giant Shein is reportedly facing scrutiny under the European Union’s Digital Services Act (DSA).

Shein will soon be designated as a company that must comply with the DSA, Bloomberg reported Friday (March 8), citing unnamed sources.

The eCommerce firm told Bloomberg: “We are in regular and constructive dialogue with the European Commission to ensure continued compliance with EU laws and regulations.”

The DSA, which went into effect in August 2023, includes measures designed to prevent the distribution of illegal products and illegal content by online platforms, according to the report.

Its rules apply to companies that have at least 45 million monthly active users in the EU, the report said.

If Shein is designated as such a company, it will join other marketplaces like AliExpress and Amazon as well as tech giants YouTube, Facebook and X, per the report.

Firms that are found to have violated the DSA’s rules are liable to incur fines equal to as much as 6% of their global revenue, according to the report.

In February, the European Commission (EC) opened formal proceedings against TikTok under the DSA, saying the regulator is investigating concerns related to the protection of minors, advertising transparency, data access for researchers, and the management of addictive design and harmful content on the platform.

Reached for comment by PYMNTS, a TikTok spokesperson provided an emailed statement saying that the platform has features to protect minors and teens, works with experts to keep young people safe and looks forward to explaining this work to the EC.

Some firms have fought back against their designation as Very Large Online Platforms (VLOPs) that are subject to the requirements of the DSA.

For example, Amazon filed a legal challenge arguing that the DSA’s criteria are “discriminatory” and that its online marketplace is not a dominant retailer across any of the EU countries where it operates.

German online retailer Zalando filed a claim similar to Amazon’s.

A spokesperson for the EC told PYMNTS in August 2023: “For marketplaces as for social networks, very wide user reach increases the risks and the platforms’ responsibilities to address them.”