Products from Israeli settlements are not in themselves illegal. However, they are not covered by the preferential tariff rates which apply to the import into the EU of products from Israel. As with any arrangement providing for free trade or preferential access to the EU, the possibility exists that the origin of products may be misrepresented with a view to benefitting from these measures. I am aware of allegations in this regard concerning settlement products, but not of any statistics giving percentages. In general it is for the importer to claim exceptions or preferential rates where these apply; if he does so incorrectly he makes himself financially liable.
I should point out that competence in matters of this kind lies with the revenue and law enforcement authorities.