Shein faces EU investigation over illegal products and addictive design features

European Union regulators have launched a formal investigation into online retail giant Shein over concerns about illegal products and potentially addictive platform design, officials announced Tuesday in London.

The investigation, initiated under the European Union’s Digital Services Act (DSA), will examine whether the fast-fashion retailer has implemented adequate safeguards to prevent the sale of illegal items across the 27-nation bloc. The European Commission, the EU’s executive arm, specifically cited concerns about products that constitute child sexual abuse material, including “child-like sex dolls.”

This probe follows serious allegations in France last year, where authorities discovered illegal weapons—including firearms, knives, and machetes—as well as child-like sex dolls available on Shein’s website. While French officials attempted to block access to Shein within the country, a court intervened and directed the European Commission to investigate under the DSA framework.

If found non-compliant with EU regulations following the investigation, Shein could face substantial financial penalties or be required to significantly alter its business practices across European markets.

The investigation extends beyond product concerns to examine the platform’s interface design. Regulators are scrutinizing what they describe as Shein’s “addictive design” features, which include point systems and rewards that incentivize continued user engagement—a practice increasingly under scrutiny across the tech sector.

Additionally, EU authorities are focusing on Shein’s recommendation algorithms, which suggest products to consumers. Regulators expressed concerns that the company fails to provide adequate transparency regarding how and why specific products are recommended to users, a key requirement under the DSA’s transparency provisions.

The DSA, which came into full effect for large platforms in February 2024, represents one of the world’s most comprehensive attempts to regulate online marketplaces and social media platforms. It places stringent requirements on major tech companies to protect users from harmful content and products while ensuring greater transparency in how their services operate.

In response to the investigation, Shein issued a statement affirming its commitment to regulatory compliance. The company stated it has “invested significantly in strengthening compliance with the DSA,” including implementing “comprehensive systemic-risk assessments and mitigation frameworks, enhanced protections for younger users, and ongoing work to design our services in ways that promote a safe and trusted user experience.”

“Protecting minors and reducing the risk of harmful content and behaviours are central to how we develop and operate our platform,” the company added.

This investigation marks another regulatory challenge for Shein, which has experienced explosive growth in recent years through its ultra-fast fashion business model offering trendy clothing at rock-bottom prices. The Singapore-based company, founded in China, has already faced scrutiny over labor practices, environmental impact, and product quality concerns in various markets.

Industry analysts note that the outcome of this investigation could have far-reaching implications for how e-commerce platforms operate within the European Union, particularly those based outside the bloc but serving European consumers. It also reflects the EU’s increasingly assertive stance on digital regulation, using the DSA as a powerful tool to shape online business practices globally.

The investigation’s timeline remains unspecified, but similar proceedings under EU digital regulations typically take several months to complete as regulators gather evidence and evaluate compliance measures.