By Martin Degeling, Kathy Meßmer, Anna Semenova, Alexander Hohlfeld, Greta Hess.

This blog post is part of a series of detailed examinations dedicated to elaborating on the findings from our scenario testing, which we have outlined in our blog post “TikTok’s Impact on Consumer Rights: A Closer Look!”. Each blog post focuses on one step of the theoretical framework of risk assessments, as developed in our risk-scenario-based audit process (RSBA; for our methodological reflections, read our blog posts on the methodology).

Young TikTok users in Germany between 18 and 25 years old end up overspending or with hidden costs after being exposed to (malicious and/or misleading) ads when swiping through the For You feed and this will lead to a low trust in consumer protection.

In the following, we will have a closer look at the macro impact that we defined as “a low trust in consumer protection.”

Following the identification of the challenges of global online trade by consumer protection agencies in 2017, the EU has implemented several measures to enhance safety rules, improve recall options, and strengthen rule enforcement. However, given the rapid and constant evolution of online marketplaces, a crucial question arises: Does TikTok present a systemic risk to consumer protection?

In summary, our data shows that TikTok is part of the problem. TikTok has a known impact on trends—not only on what to shop but also on how. Shopping has become central to the app, and plans are underway to expand. While we don’t have evidence that shows that TikTok is directly and rapidly degrading consumer protection in the EU it stands as and enabler for business practices that constantly lower the standards. While TikTok is profitting of these businesses that bring content and advertising money to the platform, they are only doing the minimal to protect users from bad experiences.

Low-trust platforms and negative experiences are more present on TikTok.

Since TikTok shop is not available in Europe we focussed on those shops that rely on TikTok for marketing. Some of the companies we found to be mentioned countless times are Temu and Shein.

They are part of a new generation of platforms that cater to consumers looking for cheap or replica products and mainly ship out of China. This comes with some consumer protection risks. The Danish Chamber of Commerce tested a number of toys sold via Temu and found that many miss appropriate markings (like the CE label) and do not meet European safety standards to protect children from chocking on small pieces.

Previously, we described how Temu and Shein have long used TikTok as their primary advertising platform without actually paying for advertising (Update: this has changed since our previous analysis). Still, our survey with young adults in Germany showed that this tactic worked. Temu, Shein, and AliExpress have a much higher brand recognition with TikTok users than with those that are not on the platform, with the result that 60% of TikTok users have already ordered from at least one of those shops.

However, brand recognition is different from brand trust. Our data also shows that 44% of Temu Shoppers think the platform is not trustworthy, for Shein 39% share that opinion. And while 99% have made positive experiences with Amazon 20 to 23% of participants report negative experiences with Temu, Shein or Aliexpress. This means that one in five customers of these shops report negative experiences.

The graph above shows the extent of negative experiences with the platforms that draw their customer base off TikTok. While participants have overwhelmingly positive experiences with Amazon purchases (99% of TikTok users report very/somewhat positive), the numbers are much worse for the shops that are well known amongst TikTok users and primarily selling from China.

In our focus groups, participants reported that the effect of this combination of low trust and bad experiences is that many only use these platforms for cheap or replica products.

Scam and hidden advertising coincide with low trust in ads on TikTok

Advertising is another aspect of consumer protection that we looked at. Users feel that the line between advertising and entertainment on TikTok is blurry. That is why our survey did not differentiate between sponsored posts and user-generated ads on TikTok. When asked about ads on TikTok, users reported several concerns. 58% state that they often encounter advertisements that seem suspicious. Additionally, 41% of users claim to have seen products that they believe are dangerous. Lastly, 63% of users generally distrust product recommendations on TikTok.

Consider this example: A few month ago, an advertisement for a knife that sold for €34,30 ran on TikTok. The ad was shown to up to 200,000 users in Germany over 6 months before it was removed. TikTok claims that the product or service promoted on the ad and/or landing page belongs to a restricted industry, and can only be viewed by users aged 18 and above. The store went offline between February and May, when the ad was still running. Since the store is now offline and the ad was published using a TikTok feature to disguise the original account, buyers have no way to contact the business. This situation underscores the real impact on users who may have purchased the product.

Overall, 23 Shopify shops linked in ads our accounts saw were no longer available just three months later. Eight shops returned an error message from Shopify. We also found that from the shops that were directly linked in a creator’s bio, 99 shops were offline, that’s 8% of all Shopify shops linked in bios.

While these might be isolated cases, they underscore the fast-paced nature of online shopping on TikTok. Our survey data supports this, with 59% of TikTok users believing that consumers are not adequately protected from negative purchasing experiences. This highlights the crucial role that platforms like TikTok play in ensuring consumer safety. Over 81% of users think that TikTok should take action against harmful products and that consumers should be warned, emphasizing the need for robust consumer protection measures.

As reported earlier, TikTok removes roughly 12% of paid commercial content; unfortunately, this often happens after those ads have already reached their audience. There is no good measure to understand the scope of the problem for non-paid ads, but querying the EU Transparency dashboard shows that out of the 5,512,610 content items that were removed from TikTok in Germany the first week of June, 77,262 were identified as scams and/or fraud, and 278 were removed because they contained unsafe or illegal products. That is 1.4% of all content removed.

The privatization of consumer protection

There are two additional results that we summarize as a “privatization of consumer protection” which go hand in hand with lower consumer protection and are linked to TikTok. First, 64% of participants think consumers are to blame for negative shopping experiences. This shows that contrary to the idea that consumer protection is a public responsibility, young adults ultimately blame the individual for buying at shops with inadequate services, falling for malicious actors, or getting into debt. This number is surprisingly high, given that more than 80% think that TikTok as a platform should do more to protect consumers. We interpret the combination of these results as an indicator that young adults while wishing for better protection from the platforms, don’t see it happening and blame individuals for not protecting themselves.

Second, our survey shows that young consumers are likelier to choose a review site as their primary source for information about an online shop than official consumer protection websites. We included Trustpilot as a response option in our survey because it was mentioned in our focus groups. Trustpilot is a publicly-traded company that runs Trustpilot.com, a consumer review website founded 2007 in Denmark. The platform hosts reviews of businesses worldwide and helps customers share their experiences and learn about businesses. It also allows companies to improve their services based on customer feedback.

Trustpilot, while not a bad source of information, operates in a fundamentally different way from a consumer protection agency. These agencies serve as advocates for consumer rights; they are not bound to any interest of companies whatsoever. Trustpilot and similar services funded by investors try to maintain a neutral position weighting consumer reviews against business interests and also offer services to businesses like facility customer engagement and review moderation.

We tested 1072 domains linked in ads on Trustpilot and found a ranking of 491. Of the remaining 581 sites, about 100 were registered only to serve advertisements, but the majority are linked shops with no reviews and, therefore, no rating.

If we took the Trustpilot rankings at face value, the results show that TikTok is linked to many bad actors. 31% of the shops have a “Poor” or “Bad” ranking. However, looking at specific rankings shows that Trustpilot is more likely not a good source of information. Not only does the list of sites with a “Bad” ranking include Tiktok.com itself, but also the public broadcaster ZDF where reviews are merely a collection of the most common comments of internet haters and conspiracy theories suggesting that the platform is spreading disinformation and is controlled by the government.

Comparing the Trustpilot results with the data from our survey shows additional biases. In our survey, 23 % of the previous customers reported having had negative experiences with Shein. The official profile on Trustpilot lists 21% 1-star reviews - which still results in a “Great” ranking. For the German site shein.de - where the company does not maintain the Trustpilot profile - there are 57% 1-star reviews resulting in a “Poor” ranking. Results are similar for Temu; with 39% 1-Star reviews, the site is rated “Average.” The most significant contrast between Trustpilot rankings and our survey results is Amazon. While only 2% of the participants in our survey reported negative experiences, 62% had 1-star reviews, resulting in a “Bad” reputation on Trustpilot.

Two things are noteworthy here: First, even with a large number of 1-star reviews, Trustpilot might consider you a “Great” shop. Second, and more importantly, these examples show that Trustpilot is not as good as a source as young adults think.

The trend in the data is unmistakable: Shops that actively manage their reviews on Trustpilot tend to have 44% higher scores compared to those that don’t. However, correlation does not imply causation, and it may be that shops that invest in verification and pay to manage their Trustpilot site could simply be those that excel in customer service. Still, this raises a critical point: The responsibility for consumer protection should not be mediated by private companies that sometimes not prioritize the consumers’ best interests.

Summary

TikToks poses a systemic risks to consumer protection, with data indicating that the platform contributes to a more general trend. Online shopping is changing with numerous drop shipping shops and large marketplaces like Temu and Shein, which cater to consumers seeking cheap or replica products. Those shops are frequently mentioned and advertised on TikTok and often fail to meet European safety standards, leading to consumer protection risks. Furthermore, a significant amount of scam and fraud within paid advertisements on TikTok only gets removed after reaching their audience. A majority of young TikTok users in Germany believe product recommendations on the platform are not trustworthy, indicating a low trust in consumer protection - as hypothized in our scenario.

More concerning, young adults are disillusioned with the state of consumer protection. While they export more from TikTok as a platform they are also more likely to check privatly owned review sites than consumer protection authorities. And even though these sources can’t be trusted, they would blame the individual rather than someone else for failures.