The National Consumer Commission (NCC) has initiated formal investigations into the South African operations of two expansive global e-commerce platforms, Temu and Shein. This pivotal regulatory decision was confirmed by the NCC’s executive head, Prudence Moilwa, during a G20 webinar held in mid-November, focusing on the advancement of consumer protection, particularly regarding product safety and the swift evolution of digital marketplaces. As reported by Moonstone Information Refinery, the regulator has formally notified both international firms about the investigation. The probe aims to fully assess their compliance with the robust requirements set out by the Consumer Protection Act (CPA), specifically targeting their marketing operations, product safety standards, and the veracity of their digital market representations.
The NCC views the e-commerce sector as a key strategic focus area, with Moilwa stating the commission is sending a clear signal that it intends to hold digital platforms accountable for their activities within the country’s borders. This action comes amidst mounting concerns regarding the impact of hyper-competitive global retailers on established domestic industries. For example, The South African Retailers Association (SARA) Report has frequently highlighted the significant pressure placed on local retailers by the importation of low-cost goods and the potential for unfair competitive advantages in supply chain and tax compliance. Furthermore, the Minister of Trade, Industry, and Competition confirmed that while the NCC had not yet received any formal complaints directly against Temu, the department remains aware of circulating concerns related to deceptive practices and product quality and safety. The Minister added that the NCC shall also monitor the impact of Temu’s recently launched local warehouse support on the entire domestic retail sector.
A central element of the NCC’s concern revolves around the increasing use of sophisticated algorithms to shape consumer experiences, purchases, and engagement. Moilwa expressed growing unease that these automated systems manipulate what consumers are shown, stressing that platforms must be transparent about the data they harvest and how automated systems use that data to target potential customers. Referencing the Protection of Personal Information Act, the regulator emphasised that when personal data is collected, the consumer must have sufficient knowledge of, and provide explicit agreement to, how that information will be utilised. The complexity of personalised marketing, which algorithms enable, demands that consumers retain the genuine ability to make fully informed purchasing decisions. According to The South African Law Journal, the nexus between the CPA and the POPI Act creates a demanding legal environment, requiring platforms to balance aggressive marketing with strict data privacy obligations.
Adding to this regulatory perspective, the Consumer Goods and Services Ombud also raised specific concerns regarding algorithmic activity, arguing that regulators require greater clarity on the mechanisms digital platforms use to prioritise certain products in search and advertising. He observed that consumers are constantly bombarded with advertisements precisely tailored to their online behaviour, raising legitimate questions about the depth of platforms’ knowledge regarding their preferences. The Ombud stressed that this call for transparency does not extend to proprietary algorithms or trade secrets; rather, it is a request for basic disclosure to help consumers understand the underlying rationale for the marketing messages they receive, thereby also allowing regulators to anticipate and address emerging complaint trends more effectively.
Ultimately, while the South African regulatory framework is acknowledged to be fundamentally robust, the core challenge identified by the NCC is one of regulatory readiness. Moilwa noted that regulators must continuously update their capacity and expertise to keep pace with rapidly evolving technology in the digital marketplace to ensure effective enforcement. As reported by the Organisation for Economic Co-operation and Development (OECD), this challenge of maintaining regulatory agility in the face of cross-border digital services is a universal hurdle for jurisdictions worldwide. The goal, the NCC maintains, is not to discourage innovation, but to ensure that all business practices, regardless of their technological sophistication, are conducted strictly within the lawful regulatory framework.