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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowOnline fast-fashion retailer Shein—which has major distribution operations in the Indianapolis area— must face the European Union’s strictest level of digital regulations, the bloc said on Friday as it added the company to its list of big platforms that need extra scrutiny.
The EU’s Executive Commission said it formally classed Shein as a “very large online platform” under the 27-nation bloc’s Digital Services Act, an expansive rulebook designed to clean up online platforms and keep internet users safe.
Shein is a low-cost online retailer that was founded in China but is now based in Singapore. It reaches customers mainly through its app. The company said it will “work constructively” to “deliver a safe and compliant environment for our online community.”
“We share the Commission’s ambition to ensure consumers in the EU can shop online with peace of mind, and we are committed to playing our part,” Leonard Lin, Shein’s global head of public affairs, said in a statement. “We also share a commitment to the principles of transparency and accountability that are at the core of the DSA.”
Shein has major operations in Indiana. In summer 2022, the company opened its Midwest distribution hub just northwest of Indianapolis—a 659,000-square-foot center in Whitestown—and announced plans for a second, 550,000-square-foot warehouse on its Boone County campus. Shein expects to boost employment at the site from about 750 to 1,400 by the end of 2025.
Shein has had a meteoric rise in the West by offering low-cost apparel and household items, primarily targeting younger women through social media partnerships with online influencers and celebrities.
Because it has more than 45 million European users, Shein has to start obeying the most stringent requirements by August. They include taking specific measures to protect online users and assessing and mitigating any “systemic risks” from its services, such as limiting the sale of illegal or counterfeit products.
Shein’s obligations also include adjusting its user interfaces and recommendation algorithms to prevent risks to consumer safety and well-being, and filing annual risk assessment reports evaluating potential harm to consumers, especially children, the commission said.
The EU already has 22 tech names including Facebook, TikTok, YouTube, Instagram, Amazon and Google Search on its list of the biggest online services that need the toughest tier of supervision since the DSA took effect last year. Other online services operating in the EU aren’t exempt – they still have to comply with the law’s general requirements. Violations are punishable by fines of up to 6% of a company’s annual worldwide revenue.
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