Legal Overview on UAE's Consumer Protection Law

UAE's Consumer Protection Law

The UAE Consumer Protection Regime has undergone drastic changes in the last few years, given that the government remains committed to building up a regime for consumers that strive to strengthen consumers' rights while fair trading practices prevail in governing business activities. These are changes that ensure consumers are protected whenever they buy goods or receive services in the UAE. It is now both in the physical and digital markets. In this regard, the Federal Decree-Law No. 5 of 2023, amending the provisions of Federal Law No. 15 of 2020 on Consumer Protection, was issued, while the Executive Regulations were issued by Cabinet Resolution No. 66 of 2023. The new law is in line with the UAE's objective of achieving a sustainable consumer market while balancing business interests. In this article, we explore the scope of the Consumer Protection Law, key rights and obligations, recent developments, and the consequences of non-compliance.

It extends to all kinds of goods and services offered by suppliers, advertisers, and commercial agents throughout the UAE, including free zones. Most importantly, it includes not only traditional commerce but also those e-commerce platforms registered in the UAE, giving equal protection for consumers shopping online as it would to those in physical stores.

However, if carried out between UAE consumers and businesses registered outside the UAE, the law is inapplicable and limits the scope in cross-border transactions. The implication is important, as its importance lies in the fact that there will always be a need to verify whether an online business is registered and licensed in the UAE.

The UAE law confers rights to consumers. Such rights empower the consumers to feel protected at each step of dealing with businesses. Some of the rights include:

I.             Right to a safe environment

Consumers need to be provided with a safe and appropriate environment when buying products or receiving services. Businesses have to ensure that their products and services are not harmful to the health of the consumers and do not cause any form of harm.

II.            Access to Correct Information

Consumers have the right to receive proper and accurate information about the goods they buy or services they avail. This includes information on pricing, specifications, warranty terms, and risks associated with the goods.

III.          Right to Choose

Consumers shall have the freedom to choose, without agency-compelled or false support, such products and services offered in the market. This agency must not manipulate consumer choice by false or misleading advertising.

IV.          Fair Compensation for Defective Goods and Services

The rights of consumers in the case of damage caused by defective products or inadequate services are fair compensation, including a right to refund, replacement, or repair at no extra cost.

V.           Right to Privacy and Data Protection

The law stresses protection of consumer data, prohibiting businesses from using personal information for promotional or marketing purposes without explicit consent.

Obligations of Suppliers and Businesses

The Consumer Protection Law imposes various obligations on businesses to protect consumer interests. These include:

I.             Provision of Transparent Information and Clear Invoices

The suppliers have to provide an invoice that contains the trade name, address, type of goods or services rendered, price, and quantity with the date and has to be in Arabic while any other languages can be allowed by the suppliers.

II.            Cultural Values Respect

Businesses should consider the religious and cultural setting of the UAE when advertising goods and services. Materials that do not abide by local customs risk punitive action.

III.          Safety Compliance

Suppliers should ensure that what they sell will be safe enough for the UAE market. There should be country-of-origin labeling, the name of the manufacturer, and cautions on usage.

IV.          Prompt Resolution of Consumer Disputes

Businesses are required to settle consumer disputes promptly and provide efficient after-sales services. This includes honoring warranty terms and addressing complaints within a reasonable timeframe.

V.           eCommerce Compliance

E-commerce businesses must provide detailed information about their licensing entity, product specifications, payment terms, and warranty in Arabic. They must also ensure that consumers are informed of their rights before completing transactions. 

Recent Developments in Consumer Protection

I.             Amendments to Telemarketing Regulations (2024)

The UAE government instituted Cabinet Resolution No. 56 of 2024, governing all telemarketing business communications. It intended to guard against intrusive telemarketing messages and safeguard a consumer's rights to personal and private data through the guidelines developed for permitted periods of calling hours and kinds of products or services that are supposed to be pushed through such lines.

To force compliance, Cabinet Resolution No. 57 of 2024 details administrative penalties for violators, including sizeable fines and potential suspension of business licenses.

II.            Expansion of eCommerce Protections

The fact that e-commerce is increasing at a very rapid rate means that the revised Consumer Protection Law focuses more on regulating transactions that take place online. This is very important since it ensures that consumers buying goods online have the same level of protection as those going to a physical store.

The law will oblige online sellers to be more transparent by indicating their licensing entity, product specifications, and payment terms. This will increase consumer confidence in buying products from such online sellers.

III.          New Penalties for Non-Compliance

The new legislation also brought into existence 46 different financial fines for violation. Suppliers failing to provide honest information, or mislead customers through false adverts, or supplying dangerous products shall be liable to imprisonment up to two years with fines up to AED 2 million.

The Consumer Protection Law does not allow business enterprises to incorporate contractual terms that are detrimental to consumers or that exempt suppliers from their legal liabilities. Any contract clause that purports to waive consumer rights or limit the liability of suppliers for defective goods or inadequate services is null and void.

This provision is critical in protecting consumers from unfair business practices, especially in industries such as real estate, automotive, and e-commerce, where complex contracts are common. 

Enforcement and Compliance 

The UAE’s Ministry of Economy is the primary authority responsible for enforcing the Consumer Protection Law. It has the power to investigate complaints, impose fines, and order businesses to recall defective products.

Businesses need to build the strongest compliance framework so they can be certain of fulfilling all those rights prescribed by the law. This encompasses: 

i.      Employee training in consumer rights and data protection practices 

ii.    Complaint resolution procedures

iii.   Periodic review of marketing materials and contracts

iv.   Keeping warranty terms, product recalls, and dispute resolutions records

Consumers may submit a complaint against the department if they feel their rights are violated. The department will test goods for safety, issue recalls, and administer administrative penalties.

The consequences for businesses and individuals not in compliance with the UAE Consumer Protection Law are severe:

i.              Penalties and Fines

Up to two years imprisonment and a fine of up to AED 2 million.

ii.            Reputation Damage

Violation of consumer rights by businesses can lead to severe damage to their reputation and loss of customer trust. 

iii.           License Suspension or Revocation

The competent authorities can suspend or revoke the license of the business in serious cases.

Conclusion

This development in the UAE's consumer protection framework reflects the country's efforts to create a fair and transparent market for all stakeholders. Business organizations must learn to adapt to these changes through improved compliance practices and prioritizing consumer welfare. The recent amendments to the Consumer Protection Law and the introduction of stricter penalties are a wake-up call for businesses operating in the UAE. Compliance is not only a legal requirement but also an opportunity to build consumer trust and establish a competitive advantage in a rapidly evolving market. Ultimately, by adhering to the law and respecting consumer rights, businesses can contribute to the UAE’s vision of becoming a global hub for commerce and innovation.