Saudi Arabia Introduces New E-Commerce Law – Consumer Protection

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The Kingdom of Saudi Arabia (KSA) continues on its way to achieve Vision 2030 by creating a thriving and open economy for business. With a worldwide expansion in the size of the e-commerce market, it was only natural for KSA to seek to increase its contribution to the future of commerce.

To do this, KSA enacted the Electronic Commerce Law, published on July 26, 2019 and entered into force on October 24, 2019 (Law) to regulate and supervise transactions carried out online that differ from those carried out in the brick trade and of mortar.

Our reading of the law is that its main objective is to regulate the practice of electronic commerce by increasing transparency, ensuring consumer protection and enhancing confidence in online transactions. Previously, Saudi Arabia did not have a stand-alone law regulating electronic commerce, different elements of online transactions were governed by provisions that were in several laws such as the Electronic Transactions Law regulating electronic signatures and records and the regulations for the application of electronic publication. which governed the activity of electronic publications, including electronic advertising.

In addition to our overview below which highlights the key elements of the Law (not exhaustive for the purposes of this customer alert), it is except that the Ministry of Trade and Investments (MOCI) will publish implementing regulations, who will develop guidelines as set out in the law, as the law as drafted is relatively straightforward and refers to some basic principles and procedures.

The law applies to consumers and providers of e-commerce services, whether established in Saudi Arabia or not, provided that they sell to consumers in the Kingdom. In addition, the law recognizes and applies to individual electronic service providers and does not restrict the application of the law to company vehicles, this explicitly covers sellers with models (Marketplace) used by many online stores. .

Data retention and privacy issues are of great concern, and the law limits the length of time an electronic service provider can retain a consumer’s personal data to the length of time that the services are provided, but the law does not specify a time frame. maximum. The law also explicitly places the burden of data protection on electronic service providers who are prohibited from using and / or disclosing such data without the consent of consumers. As the law is silent on the matter, we hope that the implementing regulations, once published, will address the transfer of data outside of Saudi Arabia.

Electronic advertising is also regulated by law, explicitly prohibiting the presentation of false statements that may mislead the consumer and / or the illegal use of a trademark. Non-compliant advertising will be liable to the penalties provided for by law.

The Law also grants the consumer a right of termination within seven days of receipt of the product if the products have not already been used. There are exceptions to these termination rights which include: custom product purchases, catering services or the sale of newspapers, books and CDs. In addition to the above right of termination, consumers can terminate the contract if the delivery of the service / product has taken more than 15 days from the execution of the contract or the delivery date agreed with the electronic service provider.

The law also provides for penalties for breaking the law, including warnings, fines not exceeding SAR 1,000,000, suspension of the electronic service provider from undertaking e-commerce activities on a temporary or permanent basis, and partial or total, temporary or permanent blocking of the online store.

Although the Act is a starting point, we believe that the implementing regulations will be no less important than the Act. If you would like to learn more about the e-commerce law and its impact on your business or future investments in Saudi Arabia, please contact the authors.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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