Businesses operating in the UAE should familiarise themselves with recent changes to consumer protection laws – and consider the extent to which they need to update their policies and practices.
Much anticipated new executive regulations take effect on 14 October and will supplement the existing Federal Law No. 15/2020 On Consumer Protection (the La”). Cabinet Decision No. 66/2023 Concerning the Executive Regulation of the Federal Law No. 15/2020 Concerning the Consumer Protection (the Regulations) were issued on 3 July 2023.
The Law was also recently amended by Federal Decree-Law No. 5/2023. Among other things, those amendments extended the power and role of the competent authority to impose administrative penalties and fines, as well as receive and consider complaints – in tandem with the Ministry of Economy.
The Law aims to safeguard consumer rights and keep up with advances in e-commerce. The new Regulations provide greater clarity of the responsibilities and obligations of suppliers. We have outlined some of these below.
E-commerce
The Regulations set out obligations on suppliers who work in the field of e-commerce in the UAE. The Law and Regulations prescribe what information needs to be presented to consumers and the format some of that information needs to take. For example, e-commerce businesses ned to provide consumers with a detailed statement as per the nature, specifications, terms of handling and risks of each commodity, both in its original language as well as in Arabic.
The Regulations also make clear that suppliers are responsible for any failure in the commodity offered by a third party that uses its e-platform for sale. Terms of service or other contractual documents with consumers or third- party suppliers which say otherwise will be null and void.
Harmful conditions
Any terms in businesses’ terms of sse, invoices, contracts, or other documents with consumers that conflict with the law will be null and void. Businesses will have to be review their consumer documentation to ensure that no terms would be considered invalid. In particular, any terms where the supplier grants themselves the right to unilaterally terminate or amend certain clauses of the contract, claim compensation, or restrict the customer’s rights, will be void.
Misleading advertisement
The Regulations set out that a description of a commodity will be deemed deceptive if there is a misleading claim which directly or indirectly creates a false or misleading impression to the consumer.
Businesses need to ensure that advertisements comply with the obligation to not be misleading. E-commerce businesses also must further ensure compliance with content restrictions under other UAE laws, such as e-media content laws.
Information requirements
The Regulations provide further detail on the type of information that must be disclosed to consumers in advance. This includes the nature of the commodity, the country of origin, the conditions for handling, and any risks.
All data, advertising, contracts, information on websites displayed by e-commerce providers, and all invoices, must be in Arabic. Other languages may be used in addition to Arabic, but Arabic must be used as a minimum.
Prices
The Law provides that businesses must ensure prices are clear and legible. The Regulations provide further restrictions. For example, the price of a commodity cannot be increased if credit cards are used as the means of payment, and suppliers must advise customers of any discounts to be offered within one week of purchase. Customers have a right to claim a refund for the difference if they are not notified in advance. Businesses will need to carefully assess their pricing models to ensure compliance with this new obligation.
Suppliers cannot advertise discounts without consent of the competent authorities and there are more detailed restrictions relating to price fixing and anti-competitive behaviour. Such articles must be considered alongside the UAE competition laws.
The Regulations also provide the Ministry with wide scope to take interim measures to curb any sudden price increase of a commodity. For this, inflation levels, foreign exchange rates, and the price of the commodity in adjacent countries, will be taken into account.
Warranty
Suppliers must provide warranty documentation upfront, which explicitly outline a warranty period. Warranty periods should be commensurate with the nature of the commodity or rendered service. The period of warranty will begin from the date that the consumer receives the original commodity or a replaced commodity if the original was defective.
Suppliers are under an obligation to maintain an adequate aftersales service and offer consumers spare parts where required within specified time limits. Businesses will need to maintain a written mechanism, in Arabic, for the provision of spare parts and maintenance services, and make this easily accessible for consumers.
Defective commodities
The Regulations set out more detailed procedures for recalls of defective products. This includes more prescriptive procedures for notifying the relevant authorities and for notifying consumers – each must be done within strict timeframes. The Regulations further emphasise the ability for consumers to demand a replacement or refund of defective products – which the supplier must again provide within strict timeframes.
Businesses should ensure that their internal systems and policies allow for these timeframes to be adhered to.
Penalties
The Law and the Regulations make provision for the issuing of civil and criminal penalties where certain articles in the legislation are breached. The maximum penalties for non-compliance that can be imposed are a fine of AED 2,000,000 ($544,600) and/or two years’ imprisonment.
The Ministry may also impose administrative sanctions and financial penalties on a supplier if it is found in breach of any provision. This can include revocation of a supplier’s licence and, in the case of a commercial agent, removal from the commercial registry.
Actions for businesses
The Law and the Regulations contribute to a growing framework of legislation that supports the rights of consumers in the UAE. Businesses need to familiarise themselves with the legal framework and ensure internal practices, policies, and consumer-facing documentation are compliant. It will be important for businesses to ensure appropriate governance and organisational structures are in place, with regular training for staff.
Co-written by Mohammad Tbaishat and Alexandra Bertz of Pinsent Masons.
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