In Brief:
The UAE has implemented a comprehensive framework to enhance consumer rights. Key legislation introduced in recent years includes:
- Data Protection Legislation: Federal Decree-Law No. 45 of 2021 on the Protection of Personal Data.
- Consumer Protection Legislation: Federal Law No. (15) of 2020 on Consumer Protection and Cabinet Resolution No. 66 of 2023 concerning the Executive Regulations of Federal Law No. (15) of 2020 (“Consumer Protection Law”).
- Digital Commerce Legislation: Federal Decree-Law No. 14/2023 on Trading by Modern Technological Means (“Digital Commerce Law”).
The Consumer Protection Law applies to all goods or services in the UAE, and to all UAE entities involved in advertising and/or providing such goods and services. In this article, we focus on the Consumer Protection Law’s impact on online trading/e-commerce, including how the new concept of ‘harmful terms’ (introduced by the 2023 Cabinet Resolution) could impact goods and services promotors/providers trading through websites, applications or other digital commerce platforms (“Online Traders”).
Please see the conclusion of this article for links to further articles discussing the UAE consumer protection legislation mentioned above.
Harmful Terms
It can be difficult, time-consuming and impractical for Online Traders to update all their website visitors and online consumers each time they amend their online policies and terms, and consumers have become accustomed to the traditional practice of Online Traders including language in their privacy policy, cookie policy or website terms and conditions allowing them to make changes unilaterally.
For example:
“Please read this Privacy Policy and note that it may change from time to time. You can always find an up to date version on this page.”
“The Company reserves the right to revise these Terms and Conditions as it deems appropriate, in order to reflect regulatory changes and best practices. We therefore ask that you regularly consult the Terms and Conditions to stay up to date.”
By reserving their right to unilaterally amend these terms, Online Traders place responsibility on the consumer to stay updated of any such changes (which minimizes the burden on providers).
In the UAE those days are over, and Online Traders will need to rethink this traditional practice.
The Consumer Protection Law, which applies to both B2B and B2C transactions, has introduced a prohibition on the use of what are deemed ‘harmful terms’, being terms or conditions which may ‘harm’ a consumer.
‘Harm’ is defined as a condition that would exempt a goods and services promotor/provider from its fundamental responsibility to consumers, or its obligations under the Consumer Protection Law. The Consumer Protection Law contains a non-exhaustive list of examples of what are considered ‘harmful terms’, which list includes the unilateral right to amend a contract.
Online privacy policies, cookie policies and website terms and conditions are essentially all contracts between Online Traders and their website visitors and users (consumers). Stating that these policies and terms may “change from time to time” or that an Online Trader may revise or update the terms when it deems it appropriate, is an attempt to allow for a unilateral change of the relevant contract, without input from the consumer, and, we note, generally without notification of such change. The inclusion of such a term will now amount to a ‘harmful term’.
Other examples of ‘harmful terms’ described in the Consumer Protection Law include:
- in the case of an unlimited contract, the Online Trader having the right to unilaterally cancel the contract without granting the same right to the consumer;
- the Online Trader having the sole right to determine if goods and services are in ‘conformity’;
- provisions which cancel or limit the consumer’s right to claim compensation where the Online Trader has breached their obligations;
- the Online Trader having the right to unilaterally change the properties of goods or services (except in the case of upgrades or where such change is beyond their control);
- using the phrase “goods sold are neither returnable nor substitutable” (except in specific circumstances); and
- the consumer, in the event of its breach, being obligated to pay the promotor/provider disproportionate compensation.
Inclusion of any of the above-listed terms or any term which would enable a goods and services promotor/provider to evade its responsibilities to consumers under the Consumer Protection Law would now not only be unenforceable, its inclusion is also a violation of the law. The penalty for including a ‘harmful term’ in a contract is substantial, at AED250,000 (per violation).
The introduction of the concept of ‘harmful terms’ into the consumer protection regime of the UAE will mean that a number of terms, which have become commonplace in online privacy policies, cookie policies and terms and conditions, will now be illegal. Online Traders are, therefore, urged to carefully consider the wording of their terms and policies in light of the Consumer Protection Law’s new ‘bite’, especially unilateral amendment terms, unilateral termination rights, terms limiting their liability (in regard to product returns and otherwise) and compensation clauses, requiring consumers to pay set damages in specific situations (liquidated damages).
Other Consumer Rights in the Consumer Protection Law
In addition to the prohibition on ‘harmful terms’, the Consumer Protection Law imposes an extensive range of obligations on Online Traders in the UAE. Examples of these additional obligations include:
- ensuring goods and services are accurately described;
- ensuring the price of goods and services is clearly displayed;
- avoiding misleading advertising;
- providing invoices and ensuring such invoices are also provided in Arabic;
- ensuring all data, advertising and contracts related to the goods and services are in Arabic;
- making consumers aware of their rights and obligations (this might include clear policies on warranties and returns, and refunds); and
- quickly and fairly settling consumer disputes (this might include a clear dispute resolution process).
The penalties associated with violating these obligations are also substantial; failing to provide an invoice, contract, or other advertising data in Arabic may attract a fine of AED100,000 (per violation), incorrectly describing a good or service could carry a penalty of AED250,000, announcing prices in a misleading manner could mean a fine of AED100,000, and failing to deal with defects in accordance with the Consumer Protection Law may lead to a AED250,000 fine.
In addition, penalties could be doubled if the violating action is repeated, and could also lead to a temporary administrative closure, suspension, or ultimately the cancellation of an entity’s trade licence and it being struck off the commercial register.
Dispute Resolution and Complaints
The Consumer Protection Law establishes a process for consumers with complaints against merchants to follow, as well as related penalties for violations (as described above). To seek to mitigate the risk of complaints (and, indeed, penalties), it is imperative for Online Traders to be aware of their obligations to consumers in the UAE.
In addition, Online Traders should be mindful of the convenience offered to consumers under the soon to be introduced consumer complaints process of the Dubai Corporation for Consumer Protection and Fair Trade (the DCCPFT, which is part of the Dubai Department of Economy and Tourism (DET)). This new process enables consumers to file formal complaints against businesses quickly and easily, simply by messaging on WhatsApp. We expect that complaints capable of being launched by consumers in this way will include complaints under the Consumer Protection Law, such as the inclusion of a ‘harmful term’ in a contract or misleading advertising. A Dubai resident could simply upload documents related to their grievance via WhatsApp, and would quickly receive a ‘resolution letter’ from the DCCPFT, which they would then be able to present to the relevant business for execution and the swift resolution of their complaint. If an Online Trader refused to accept the resolution prescribed by the DCCPFT, they would face potential penalties.
Online Traders would be well advised to become familiar, therefore, not only with the Consumer Protection Law dispute resolution process and potential penalties, but also with the mechanisms that are being established in the UAE to aid consumers in exercising their rights.
Next Steps
The topics discussed in this article are not exhaustive of the requirements and obligations on Online Traders under the Consumer Protection Law. Online Traders are advised to review their websites, e-commerce websites and contracts (whether these are contracts entered into with individuals or with other companies) and make the changes necessary to ensure compliance with the Consumer Protection Law.
In addition to the Consumer Protection Law, Online Traders in the UAE market (wherever they are located around the globe) should also be aware of the UAE’s new digital commerce law (Federal Decree-Law No. 14/2023 on Trading by Modern Technological Means) and the impact the provisions of this law may have on their websites, applications or other digital commerce platforms which are accessed by consumers in the UAE. You can read our article on this here.
See also our article here on compliance with the UAE Data Protection Legislation.
For more information, please contact a member of the Hadef Commercial Team (Victoria Woods, Partner - v.woods@hadefpartners.com, Diana Froyland, Senior Counsel - d.froyland@hadefpartners.com, or Julie Beeton, Senior Counsel - j.beeton@hadefpartners.com).