Temu to use gambling-like elements for advertising

The Chinese shopping platform Temu often offers extreme bargains from every conceivable product category - from fashion to electronics and leisure items to home furnishings. However, the offers are repeatedly criticised for being too cheap, too unsafe and often misleading. Now advertising is also increasingly coming under scrutiny, with gambling-like elements designed to provide manipulative incentives to buy.

Temu seems to be omnipresent on the internet. If no ad blocker is used, the colourful, stylish product suggestions are a real constant companion in the daily use of search engines, weather services, social media and the like. The Wall Street Journal reported that by 2023, no other company will have placed as many promotions on Meta's network, which also includes Facebook and Instagram, as the Chinese online retailer. According to the report, Temu is also one of Google's top five largest advertising customers.

Interested parties are enticed by corresponding adverts with mini prices, astonishing discounts of up to 90 per cent and ever more bizarre products. In fact, it is largely due to the strong advertising activity that Temu has been able to establish itself so quickly on the German market. According to a survey by market research company Appinio - which incidentally also conducted a study this year on the question ‘What would Germans NOT buy if they won a jackpot?’ - one in four 16- to 65-year-old Germans was already a Temu customer. In 2023, this meant fourth place in the ranking of the most successful online retail platforms in Germany. According to the internet analysis experts at Similarweb, it was even enough for first place among the shopping apps with the most downloads.

In fact, the advertising within this app is the main bone of contention. The company has even more room for manoeuvre here than with its major advertising partners and exploits this. According to consumer advocates and politicians, the mini-games, wheels of fortune and other gamifications sometimes included in the adverts are particularly problematic. Authorities and political parties have issued an urgent warning: such promotional methods are sometimes manipulative and addictive. Violations of the EU's Digital Services Act are suspected. Nevertheless, there are hardly any legally promising options for action.

Temu's gamification marketing is said to be similar to gambling and create manipulative incentives to buy

The Temu app in particular uses special advertising methods to create special incentives to buy. Many formats have a playful character and even gambling elements can be recognised, according to Michael Wessel, endowed professor for e-commerce at the University of Jena, in an interview with the public TV station MDR. You can spin the wheels of fortune, collect points or even fulfil certain missions in order to (usually) receive even more favourable offers.

All in all, this approach massively encourages customers to use the platform more and more intensively and ultimately chew more. The Federal Association of Consumer Centres warned that Temu blurs the boundaries between entertainment and consumption. This is manipulative and therefore legally problematic.

As younger people in particular have a connection to such features, they are exposed to a high risk of manipulation: Consumer Protection State Secretary Christiane Rohleder told MDR. However, data from the USA shows that older generations are also increasingly buying from Temu and are therefore also kept in line by customised advertising.

Rohleder also expressed her criticism in Horizont, the trade magazine for the advertising industry:

"Games, wheels of fortune, discount countdowns etc. suggest incredible discounts and bargains. Temu is constantly creating new incentives to buy."

In this context, she points out that the manipulative design of online platforms has been banned in the EU's Digital Services Act. It is important that corresponding regulations are now enforced.

Can the EU Digital Services Act fix it?

The EU's Digital Services Act stipulates, among other things, that design elements that are capable of deceiving or manipulating recipients and impairing their ability to make a free decision constitute an offence. If the courts were to categorise Temu's specific advertising practices in this way, there would in principle be promising legal options.

For the time being, the only option is for consumer protection organisations to take the initiative: Namely, these organisations have the option of issuing warning letters and filing lawsuits. According to MDR, the organisations are currently considering going to court.

Temu takes a clear stance on the allegations at MDR

A Temu spokesperson commented on the allegations to MDR. He contradicts the concerns of consumer protection quite objectively: the activities are nothing special - they are familiar in a similar form from shopping centres or from fairs and funfairs.

Temu had not expected such accusations:

"We were quite surprised when we learnt that our approach to interactive online shopping could be perceived as manipulative. That was never our intention."

Added value when shopping online is a priority for Temu:

Promotions like these ‘are not only common in traditional retail, but also contribute to an enjoyable shopping experience. Our time-limited offers, for example, reflect the concept of ‘flash sales’ in bricks-and-mortar retail. Our competitions and prize draws are also based on promotions in shopping centres. Voucher prize draws are common in customer loyalty programmes.": Thus the official comment at MDR. In particular, the aim would be to ‘transfer these offline experiences to the digital world and convey a sense of familiarity and fun when shopping online’.

The Temu spokesperson continues:

"Exciting features allow customers to unlock discounts that make our already competitive prices even more attractive. We have received positive feedback from many customers who appreciate these interactive elements in our app."

Conclusion

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