Better Protection to Consumers in UAE with New Laws in Place

In an effort to provide higher level of protection to the consumers in the country, the United Arab Emirates has adopted a new law which will now include redressal of issues with specific regard to online shopping platforms. The laws comes in force following the soaring sales through the online platforms during the shutdowns and the global pandemic. The legislation applies not only to suppliers, sellers and advertisers in the UAE, but also to e-commerce providers for rapid settlement of disputes and compensation. The law envisages to render the providers with a framework for fair and legal treatment of consumers.

The UAE has updated the Consumer Protection Law, via the Federal Law No. 15/2020, to protect consumers and the industry from the practice of using personal data for marketing and advertising. The Consumer Protection Law lays down restrictions on the use of customer’s personal data for marketing or advertising purposes. The Consumer Protection Law has been updated as the country has become one of the fastest growing online shopping markets in the UAE.

Objectives for the Updated Law

The Consumer Protection Law is recognised and covered by the rapid rise of e-commerce services including in the UAE. The law was amended for the first time to take into account the privacy and data security of e-commerce consumers and the unauthorized use of consumer data. The scope of the Consumer Protection Law has also been extended to goods and services distributed outside the UAE and the UAE Free Zone as well as registered e-commerce service providers outside the country. The concept of e-commerce service providers is not specified in the old law, and there is some ambiguity about the application of consumer rights.

This is an adaptation following the recent flood of online purchases of goods and services as a result of the increasing digitisation of purchasing and service offerings, accelerated inter alia by lockouts and other pandemic-related public restrictions and individual concerns. As online shopping platforms experience soaring sales during the closures, the UAE has adopted a new law to provide a higher level of consumer protection to consumers in the country. The government passed this federal law as part of an on-going national campaign to maintain a high level of consumer protection in the United Arab Emirates (UAE).

Delving into the Specific Provisions

In general, the 2020 Law is similar to the 2006 Law on the Protection of Consumer Rights and aims, among other things, to create a safe and appropriate environment for the purchase of products and services, to protect a consumer's religious values, customs and traditions and to ensure that consumers receive accurate information about what they are buying and are aware of their rights and recourse. The 2020 law provides for a rapid settlement of disputes and compensation and provides providers with a framework for fair and legal treatment of consumers. The new law extends the scope of application of consumer rights to include a general article on consumer rights as compared to the 2006 one. The scope of the new Consumer Law is broader than when it was developed and extends the definition of a supplier to all persons involved in the production, trade or storage of goods.

Under Article 4 of the Consumer Protection Law, suppliers and companies are obliged to protect the data of their consumers. The new law provides for hefty penalties and a new definition to protect consumer rights. For example, the new Data Protection Law for consumers introduces an obligation for privacy and data security providers not to misuse or use them for their own personal marketing and advertising. Article 4 lists out a bunch of rights which include a safe and appropriate environment, correct information and education on the products, respect for religious values and fair compensation in cases of damaged products, apart from the above mentioned key highlight.

Chapter 2 of the law delves into the obligations of the Supplier, Advertiser, and Commercial Agent. The articles from 7 to 21 of the chapter elucidates on rights ranging across fair explanatory information, placing the price visibly, exclusion of conditions harmful for the consumer, and mandate for implementation of warranties.

The above mentioned mandate for implementation of warranties acts to protect, say, customers of cars to repair their cars at a mechanic verified by the government, and still be eligible for warranty if within the said period. Such out of affiliated service centre servicing would not forfeit warranty in itself. Furthermore, as per Article 9, the Minister has the authority to take emergency actions in unusual situations to protect the consumer.

Subsequently, Chapter 3 elucidates on the Protection of Consumer Rights, assigning and empowering the ministry, under Article 22, to take up a prominent role in consumer protection, by receiving complaints, educating consumers, through publications, and by implementing this law. The consumer's right to have compensation in cases of material damage in products offered to them has been affirmed under Article 24. Furthermore, Article 25 addresses E-commerce and explains why the respective vendors are supposed to provide consumers with adequate details in Arabic. The law also insists on using Arabic on legal documents and provides for legal actions and seizures, if required.

The provisions on penalties address contraventions as sets of articles, providing a specific amount of fine and/or imprisonment. Apart from the above, competent courts are also authorised to order confiscation, closure of the shop or place, or publication of their order in Newspapers. As set out in Article 33 of the Consumer Protection Law, businesses have a one-year transition period from the date of entry into force of the law to comply with the provisions of the law.

New Consumer Protection Law and Outcomes

The consumer protection Law, designed to protect consumer rights in the United Arab Emirates (UAE) is covering the sale and purchase of goods and services by consumers in connection with the supply of the UAE, including its free zones and e-commerce channels registered in the UAE. The Federal Consumer Protection Law covers consumer rights for all goods or services in the country, including those in its free zone. This means that companies can place greater emphasis on transparency and disclosure in consumer contracts to help customers choose appropriate products and services based on true and accurate information about the services and goods offered and their prices. Although there is no comprehensive overarching data protection legislation in the UAE, the new Consumer Law aims to further protect the privacy of consumers by including Articles 4 and 5, which define consumer rights to privacy and data protection against the unauthorised use of their personal data for marketing and advertising purposes.

The Federal Consumer Protection Law, which covers consumer rights for all goods and services within the UAE including its Free Zones, also requires companies to provide aftercare services to repair or replace products if defects occur. The strict penalties contained in the Consumer Protection Law will act as a deterrent to suppliers in the UAE to avoid exploitation of their customers and ensure compliance with their legal obligations. Executive orders are expected to follow to clarify and broaden the themes of the new law.

The new Consumer Protection Law provides for hefty penalties to increase deterrence and step up efforts to support consumer rights. For the first time, the law provides for imprisonment of up to two years. The broad scope of the law and the hefty penalties it imposes make the UAE a pioneer among nations dealing with violations of consumer rights.

The Ministry of Economy provides a hotline (600-522-225) for complaints relating to breaches of consumer rights. Department of Economic Development (DED) in the Emirates deals with consumer rights issues and implements plans and procedures in connection with consumer protection laws. DED responds to consumer complaints and raises consumer awareness of consumer rights and obligations.