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Shein Faces Stricter Digital Regulations in the European Union
Shein, the online fast-fashion retailer founded in China in 2008, is set to encounter more rigorous digital regulations from the European Union, the world’s largest trading bloc revealed in a statement on Friday.
Classification as a “Very Large Online Platform”
The EU officially designated Shein as a “very large online platform” (VLOP) under the Digital Services Act (DSA), a legislative framework aimed at safeguarding online users and fostering secure digital environments. With over 45 million monthly users spanning across its 27 European member states, Shein surpasses the DSA threshold, prompting the need for enhanced compliance by August 2024.
According to the European Commission, Shein must furnish a comprehensive risk assessment report within four months, detailing “mitigation measures” to combat the trading and distribution of counterfeit goods, unsafe products, and items infringing on intellectual property rights. Past allegations have surfaced accusing Shein of replicating designs from brands like Uniqlo, although such claims have not hindered its consideration of an initial public offering (IPO).
Annual Risk Assessment Reports and External Audits
Overseeing a process of annual risk evaluation, Shein must evaluate potential harm to customers, particularly minors, and ensure external audits verify the validity of its risk assessments. The Commission’s recent enforcement measures follow its prior designation decisions from a year ago, underscoring the EU’s commitment to upholding digital standards.
In the event of violations against the outlined guidelines, Shein could face fines up to 6% of its annual worldwide revenue, an indication of the stringent repercussions for non-compliance. Notably, Shein joins other tech giants like Amazon, Meta, and TikTok on the Commission’s roster, with 23 companies identified as “very large online platforms” under the DSA guidelines.
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