The year 2020 has seen a huge rise in ecommerce throughout the world. Numerous reasons can be attributed for the same including advancement of technology, growing public interest in online platforms and the repercussions of the global pandemic. In UAE, one of the most sought-after business hubs in the world, the government has updated their consumer protection law to ensure safe business practices in the ecommerce sector.
What is the update?
The Federal Law No. 24 for consumer protection has been revamped to include more safety for ecommerce consumers and bring more reliability within the industry. The new Federal Law No. 15 issued on 10th November 2020 safeguards the privacy rights of consumers by imposing more restriction on using personal data of customers for marketing and promotional purposes. Every investor who aims for an ecommerce business formation in UAE should be aware of these laws to make their business transactions hassle free.
How does the law apply to ecommerce business?
Let us check the major features of the updated law and how it is going to affect the ecommerce business sector in the future.
Protecting data privacy
As the concept of an ecommerce service provider was not specified precisely in the old law, there was some ambiguity regarding the application of consumer rights as well. The reach of consumer protection law has now been extended to include all goods and services provided within UAE, any of its free zones and ecommerce service providers that are registered in the UAE.
For the first time, the consumer protection law has been modified to consider the privacy and data security of ecommerce customers and unauthorized use of consumer data. Apart from guaranteeing data privacy, the law insists on providing right information to the customers. The Consumer Protection Law also covers the protection of the buyer’s religious values, customs and traditions while selling a commodity or service. This will need ecommerce businesses in UAE to reconsider their current consumer privacy policies and make necessary amendments wherever needed.
Providing documents in Arabic
Another mandate specified by the new law is that, every ecommerce business in UAE must provide customers and the government authorities with their names, address, legal status and details of the licensing authority in Arabic language, on the products or services that they offer.
According to Article 8 of the Consumer Protection Law, a service provider is already responsible to provide an invoice to the customer in Arabic and in any other language of provider’s choice, if any. The penalty for breaking this law can include a minimum fine of AED 2,000 up to a maximum of AED 200,000 or imprisonment for a term of not less than six months.
Imposing stricter penalties
The updated Consumer Protection Law has considerably increased the penalty for violation of the law. Companies that create product promotion or advertisements in a misleading way can be fined a minimum amount of AED 10,000 and can go up to a maximum of AED 2,000,000 or imprisonment up to two years.
What ecommerce businesses should do?
The global pandemic has resulted in a huge growth in ecommerce sector and increased dependence on digital technologies. The recent update in the Consumer Protection Law envisions UAE’s transformation into a digital society while safeguarding consumer interests. So, to comply with these new regulations, ecommerce businesses in UAE should review their consumer policies and make necessary changes at the earliest. If you are planning for an ecommerce business formation in UAE, our expert consultants at Axiom Mark will offer you all required support and guidance for the same.