New E-Commerce Law of Saudi Arabia
August 01,2019
The Electronic Commerce Law, recently approved (9 July 2019) by the Council of Ministers, aims to promote confidence in e-commerce transactions and to provide protection to consumers. The law strengthens the reliability of business transactions, stimulates and develops e-commerce activities, protects all the rights of consumers, and safeguards consumers from fraud, deception, and misleading statements.
E-commerce is a promising global market worth over $30 trillion. The Kingdom is one of the top 10 countries in the world in terms of the e-commerce growth rate, which exceeds 32 percent annually. The volume of e-trade in the Kingdom reached SR80 billion in 2018, with an increase of average online spending per capita to SR4,000.
The most significant provisions of the E-commerce law:
¾ Regulating the relationship between the E-commerce Practitioner and the E-Shopper
¾ Showing contact details and the features of the product / service
¾ Protecting the e-shopper’s data personal details and privacy of the consumer
¾ Remedying late delivery
¾ Complying with the provisions of licensed professions
¾ Regulation of Commercial Electronic advertisements
¾ Withdrawing / blocking violating advertisements
¾ If the service provider has no business premises, its place of residence shall be considered as its business premises.
¾ Penalties for violating E-Commerce Law
¾ This law will be in effect as of 09/10/2019G – 10/2/1441H
The law consists of 26 articles that provide, to e-commerce transactions, the necessary protection from fraud and deception in a manner that preserves the rights of both the e-commerce merchant and the electronic shopper.
This is a first-of-its-kind regulation in the Kingdom in terms of the relationship between consumers and those e-commerce merchants that do not have a commercial registration. The law specifies that e-commerce merchants that do not have a commercial registration must identify their place of business, clarify their data through their online store to ensure the protection of consumer data and privacy, and document their business through one of the electronic store documentation platforms.
The law also enhances the role of department store registries and digital platforms that act as intermediaries between e-commerce merchants and online shoppers.
The law makes it clear that the place of business shall not be determined based solely on the location of the supporting technology (e.g., servers) or on the use of a domain name with a particular country-code extension.
Protection of Consumers
The law requires that e-commerce merchants provide the consumer with the terms and conditions of the contract. In addition to information about the e-commerce merchant, this information should include the steps required to conclude the contract, a description of the goods or services, details about the price and any fees or extra amounts due, arrangements for payment, delivery, and implementation, and information about any warranties.
The e-commerce merchant must provide an invoice in Arabic for each order, including the price per item, the total price, the delivery date, and any taxes to be imposed (VAT).
The law stipulates that the consumer has the right to return the product or service within seven (7) days if the product or service was not used or that the consumer did not benefit from the product or service, except for certain circumstances specified in the law. Also, the consumer has the right to cancel the purchasing process if the service provider delays delivery for longer than 15 days.
The law specifies that the e-commerce merchant must take responsibility for the safekeeping of personal information. E-commerce merchants cannot keep personal data for longer than is necessary and cannot use personal data or share it with third parties without the consumer’s consent.
The law regulates the electronic advertising market to protect consumers from infringing or misleading advertisements. It specifically prohibits advertisements that contain false representations or that are expressed in terms that would deceive or mislead the consumer, as well as advertisements that infringe on third-party trademarks. Failure to withdraw an offending advertisement within one day of receiving notice is an offense. When an advertisement is not withdrawn upon notification, the Ministry can liaise with the appropriate authorities to have the e-commerce platform blocked in the Kingdom.
How the law will be enforced:
The law requires the formation of one or more committees to consider violations of the provisions of the law or its executive regulations and to punish the violator with one or more of the following penalties: warning; stopping the activity temporarily or permanently; blocking the Internet service partially or wholly; and imposing fines of up to SR1 million.
The new law will go into effect 90 days from the date of its publication in the official gazette (Um Al-qura). In the meantime, the executive regulations of the law will be issued.
Firoz Mohammed, Senior Associate. Khalil Khazindar Law Firm offer practical and results-oriented legal advice to help you achieve your business goals. We offer comprehensive legal services including consultation on best practices and review & drafting of agreements for compliance. For assistance, please contact us at email: info@khazindarlaw.com to discuss your eCommerce legal issue.