The European Union has opened a formal investigation into Shein after French regulators found listings for “child-like sex dolls” on the retail platform last year. The investigation will assess whether the systems Shein is using to curb illegal product sales are compliant with the EU’s Digital Services Act (DSA), according to the European Commission, including “content which could constitute child sexual abuse material.”

The commission will also examine the transparency of Shein’s content recommendation systems, and concerns regarding the retailer’s “addictive design,” including gamified programmes that give points and other rewards to shoppers.

“In the EU, illegal products are prohibited – whether they are on a store shelf or on an online marketplace,” EU tech chief Henna Virkkunen said in the announcement. “The Digital Services Act keeps shoppers safe, protects their wellbeing and empowers them with information about the algorithms they are interacting with. We will assess whether Shein is respecting these rules and their responsibility.”

Companies can be fined up to six percent of their annual global revenue for DSA violations, putting Shein at risk of $2.2 billion in penalties, according to its total $37 billion revenue for 2024. In a statement to The Wall Street Journal, Shein said it has made significant investments into bolstering DSA compliance in recent months, such as improving detection tools and safeguards around age-restricted products.

“We share the commission’s objective of ensuring a safe and trusted online environment and will continue to engage constructively on this procedure,” Shein said.