UAE businesses can be fined up to Dh1 million under amended consumer protection law

New regulation includes 43 obligations for companies

The UAE has amended the federal law from 2020 to provide more protection to consumers. Khushnum Bhandari / The National

The amended UAE consumer protection law has come into force, with businesses that break rules on the supply of goods and services to consumers liable for fines of up to Dh1 million ($272,000), the Ministry of Economy said on Thursday.

There are 43 obligations for businesses listed in the updated law, relating to the warranty of a product, prices, invoices and replacement of products. The law applies to companies trading in physical stores as well as online businesses.

It also lists 46 administrative sanctions that can be imposed either by the ministry or the local authority against the supplier “if there is any inconsistency in the terms of his agreement with the consumer", Abdullah Al Saleh, undersecretary of the Ministry of Economy, told a media briefing.

The fines start from Dh100,000 and rise to Dh1 million.

A fine of Dh250,000 will be imposed on the supplier in case of failure to repair, maintain, provide after-sales services, return goods or offer a refund within a certain time limit after a defect is discovered.

A Dh200,000 fine will be imposed on the supplier in the event of failure to comply with standard specifications, rules and conditions of safety and health, the ministry said in a statement.

Penalties will be applied, ranging from a warning to fines. In some instances, they could lead to licence cancellation or deregistration in the case of repeat offences, the statement said.

Local authorities have been granted legal powers to receive, follow up and act on consumer complaints, to impose administrative sanctions and fines for acts committed in breach of the provisions of the law, as well as acting on grievances submitted against decisions on punitive measures, Mr Al Saleh said.

The new rules were introduced following the decision taken by the UAE Cabinet last year concerning the executive regulation of Federal Law No 15 of 2020 on consumer protection.

“According to the new law, a new provision has been inserted, which mainly highlights that merchants shall not only put a selling price on goods, but rather price products by unit," Mr Al Saleh said.

"This ensures the highest levels of transparency in setting prices, thus avoiding any misleading offers. It also enables consumers to choose from a range of alternative goods, and compare prices effortlessly.”

The Federal Law No. 15 of 2020 on consumer protection aims to protect consumer rights, including the right to a standard quality of goods and services and the right to obtain them at the declared price.

The law covers all goods and services sold or provided by suppliers, advertisers and commercial agents across the UAE’s mainland and free zones. It also covers goods sold through e-commerce platforms registered in the UAE.

Retailer Landmark Group said it supports the principles aimed at enhancing transparency and accountability in the provision of goods and services.

“This legislative update reinforces consumer rights and encourages fair business practices," Gaurav Mediratta, general counsel – Legal at Landmark Group, told The National.

"We believe these measures will benefit consumers directly and contribute to a culture of integrity in the retail and hospitality sectors."

The move also "empower local authorities" and foster a "more ethical business environment", he added.

The UAE consumer protection law and the new executive regulations aim to "protect consumer rights and health and safety by introducing stringent penalties for breach of regulations relating to areas such as labelling, pricing, warranties, spare parts and defects", according to Alexandra Lester, partner, dispute resolution at Clyde & Co UAE.

"There are also penalties for misleading advertising and anti-competitive practices," she told The National.

"While this may increase the burden on businesses, the regulations are generally in line with (and in some cases, go further) than other major global economies and are to be considered best practice, all of which are positive developments for fostering a fair and free market for consumers and making the UAE an attractive place to live and trade.”

The UAE has introduced several regulations as it aims to attract more investment and boost its economic competitiveness.

Last year, the Emirates issued a new e-commerce law to help boost its digital economy amid a sharp rise in the number of online transactions.

"The amendments provide detail and granularity to the existing legislation, as well as clarity on the consequences of any breach which provides businesses with a degree of certainty both in terms of how to comply, and the consequences of not doing so," said Sandeep Dhama, partner, Stephenson Harwood Middle East.

The new law is a "continuation of the efforts the UAE is making to enhance consumer protections", said Hani Naja, a partner in corporate and commercial at Baker & McKenzie.

Highlights of the law and its executive regulation

• Establishes an integrated legislative system to protect consumers' rights and provide the highest standards of protection to consumers when purchasing goods, and services from suppliers.

• For the first time in the country, a list of 46 offences has been introduced, with fines for the violation of some cases going up to Dh1 million, to deter any infringements on consumer rights guaranteed by the law and its implementing regulation.

• Establishes a more balanced and equitable merchant-consumer relationship by placing more than 43 commitments on providers and introducing integrated regulatory mechanisms and procedures to enable sound business practices and to enhance consumer satisfaction, happiness and well-being.

• Provides consumers with a new complaint mechanism, expedited dispute resolution which avoids them going in every case to the judiciary through solid legal basis and clear procedures for imposing sanctions and fines.