AliExpress fined record €550m by EU for failing to stop sale of illegal and fake goods | Retail industry

Chinese online retail platform AliExpress has been fined a record €550m (£470m) by the EU for failing to prevent illegal goods, including harmful clothing, cosmetics and kitchen appliances, from being sold through its site.

The European Commission’s fine is the largest imposed by the bloc under Digital Services Act (DSA) legislation aimed at protecting consumers from illegal goods and deceptive or addictive marketing techniques.

Henna Virkkunen, the commission’s deputy head for technology sovereignty, security and democracy, said: “The spread of fake clothes, unsafe toys, dangerous cosmetics and other illegal and harmful products is not an inevitable cost of online shopping; it is AliExpress’s failure to comply with its obligations under the Digital Services Act.”

“Scale is no excuse; risks must be identified and systematically addressed to ensure consumers can shop online safely. Today, we hold AliExpress to that standard and demand action.”

While the fine was much larger than those previously imposed on Temu (€200 million) and X (€120 million) under the DSA, it represented less than 1% of the €122 billion in revenues AliExpress’ parent company Alibaba earned last year. He could be fined a maximum of 6 percent of global annual income.

Temu was fined in May for failing to stop the sale of illegal and dangerous products, while Temu is still under EU investigation on other matters and could face another fine.

The European Commission found that AliExpress did not have enough staff to assess the legality of products, sometimes giving them only “tens of seconds” to judge whether a product met EU standards.

It was also found that many illegal products were promoted within AliExpress’s recommendation systems and that the company’s internal risk assessments had failed.

“Many illegal products, from counterfeits to unsafe toys and dangerous cosmetics, circulated on the platform and remained online for several weeks even if detected,” the commission said.

A senior commission official added that the size of the penalty reflected the “nature and seriousness” of the platform’s failure to implement mitigating measures to stop harmful or dangerous goods being offered to consumers.

AliExpress immediately condemned the penalty as “disproportionate”. The statement said: “We disagree with today’s decision and disproportionate fine, which do not adequately reflect our established framework and the significant, proactive improvements we have made.

The company said it would “appeal the decision” of the commission, claiming the penalty “ignores our robust risk management framework and the significant, proactive improvements we have made”.

Previous investigations by the EU into a sample of products sold on major retail platforms, including Shein, found that 65% of cosmetics, 63% of food supplements and 60% of personal protection equipment for construction sites, such as hard hats and steel-toed boots, were non-compliant.

Officials said the fine was not due to the discovery of illegal goods on AliExpress, but rather to its failure to put in place barriers or mitigations to protect consumers from “illegal, improper and counterfeit goods” that are illegal under EU law.

The European Commission said that after an investigation lasting more than two years, the company was given the opportunity to fix its compliance and risk procedures but failed to do so.

The Commission found that AliExpress had imposed terms and conditions that appeared to comply with EU law (that retailers should not place any illegal products on its platform), but in reality sellers could easily place non-compliant products on the platform.

Through internal testing, the Commission found large-scale breaches despite claims the company was operating under the EU’s “safety gate” for non-food products, a rapid alert system that allows unsafe products to be quickly identified, recalled or banned.

The commission said it “found millions of products that reappeared online, sometimes remaining for more than a month” after being flagged as illegal under EU law.

The Commission was particularly concerned about the large number of counterfeit products on the site and the ease with which sellers sometimes bypassed barriers by “misclassifying” a fake fashion label as unbranded.

AliExpress is the largest Chinese online retail operator in the EU with 193 million users, much larger than Shein with 156 million users and Temu with 130 million users.