Saudi Arabia: 44 stores fined for breaking e-commerce laws, five shut down

Abu Dhabi: 44 Maarouf-registered electronic stores that guarantee data confidentiality of its users have been fined and five others shut, according to the Ministry of Commerce, local media reported.

“Offenders were issued with fines and five other e-stores were shut down for breaking the e-commerce laws,” officials of the ministry told Al Riyadh newspaper.

Officials reminded owners of e-stores to review and update their procedures and systems to protect consumer personal data; prepare a privacy policy, if they don’t already have one in place on their website; amend their electronic advertising and include an “unsubscribe” option; update their terms and conditions and invoices in line with the Regulations; register their E-store on the commercial register; and ensure that they hold the appropriate licence from the ministry, if based in the kingdom.

They warned that the fines for breach of the law are substantial – up to one million Saudi riyals and/or permanent or temporary suspension of e-commerce in the kingdom.

Consumer protection

The law aims to improve overall consumer confidence in e-commerce transactions. It includes provisions intended to protect consumers against fraud, deception and misrepresentation of information. There is a clear emphasis on the protection of consumer data, and the E-Commerce Law imposes a legal obligation on the service provider to maintain the privacy of a consumer’s data. Furthermore, the E-Commerce Law includes a provision that consumers may return goods, or terminate a contract of service, obtained through an e-commerce channel, within seven days of receipt, if they have not used or benefitted from the goods or services - except for certain circumstances that are set out in the law. Such circumstances are likely to include a situation where the good is defective due to poor consumer care. Consumer also have the right to cancel their order if the service provider delays delivery for more than 15 days. Further, certain obligations are placed around electronic advertisements to further protect consumers against fraud.

Promising market

An independent study conducted by ‘eShopWorld’ in 2018 reported that “there are currently 12.94 million e-commerce users in Saudi Arabia, with an additional 6.34 million users expected by 2022” and that in 2022 the “19.28 million e-commerce users will spend an average of USD 487.70 online”.

E-commerce is a fast-evolving sector in Saudi Arabia that has seen a continuous upwards trend over the last few years. According to figures from Saudi Communications and Information Technology Commission, e-commerce grew 49.9 per cent in 2018, up from 47.9 per cent in 2017, and 37.3 per cent in 2016.

Monitoring and enforcement

The E-Commerce Law has given the authority to the Ministry of Commerce to apply punitive measures in the event of an individual violating provisions of the law. The severity of the penalties that can be imposed pursuant to the E-Commerce Law range, depending on the violation, from the violator receiving a mere warning, to receiving a monetary fine of up to one million Saudi Riyals. In addition, the e-commerce store may be suspended, or closed down permanently, or have its website blocked. The severity of the penalty imposed takes into consideration factors such as the seriousness of the violation, its frequency and the damage caused to others.

The Department of Monitoring Electronic Stores is tasked to monitor electronic stores, monitor their compliance with the E-Commerce Law and receiving consumers’ complaints.