UAE Implements Revised Penalties and Amendments Under Consumer Protection Law

Posted by Dr. Hassan Elhais on July 22nd, 2024

Introduction:

The Ministry of Economy in the UAE has recently introduced a comprehensive list of violations under Cabinet Decision No. 66/2023 concerning the Executive Regulation of Federal Law No. 15/2020 on Consumer Protection. Federal Law No. 15/2020 regarding Consumer Protection has been further amended through Federal Decree-Law No. 5 of 2023, enhancing various provisions to better safeguard consumer rights.

Key Amendments Under Federal Decree-Law No. 5/2023:

The Supreme Committee for Consumer Protection: The amended Article 5 establishes the formation of the Supreme Committee for Consumer Protection by a Cabinet decision based on the Minister’s proposal. This Committee reports to the Ministry, is managed by the Minister, and includes various members whose competencies and rules of procedure are determined by the decision.

Commercial Agencies:

In accordance with the amended Article 16 of the consumer protection law governing commercial agencies, agents or distributors are required to:

• Implement all warranties provided by the producer or principal regarding the good or service.
• Provide a similar good for the consumer to use without charge if warranty implementation exceeds seven days, until warranties are fulfilled.
• Comply with all obligations of the supplier as stipulated in the Consumer Protection Law if the service or good is provided through the agent.

Role of the Ministry and Competent Authority in Protecting Consumer Rights:

According to the amended Article 22, the Ministry, in cooperation with competent authorities, will oversee the implementation of the general policy for consumer protection, focusing on:

• Educating and raising consumer awareness about risks associated with certain goods and services, including e-commerce.
• Publishing decisions and recommendations to increase consumer awareness.
• Monitoring price movements and working to limit increases.
• Promoting competition and combating misleading advertisements and monopoly.
• Receiving consumer complaints and taking necessary measures, with the Implementing Regulation detailing the system for complaint handling and coordination.

The administrative penalties and fines that the Ministry or competent authority may impose on suppliers will be issued by a Cabinet decision.

Grievance Procedure:

Amended Article 35 states that interested parties can file a grievance in writing with the Minister or the head of the competent authority regarding decisions and measures taken against them under the Consumer Protection Law within 15 working days of notification. The grievance must include all supporting documents and will be decided within 30 days, with the decision being final. Lack of response within the period will be considered a rejection.

Administrative Sanctions Under Cabinet Decision No. 66/2023:

The Ministry of Economy may impose one or more administrative sanctions on suppliers for violations of Federal Law No. 15/2020 concerning Consumer Protection. These sanctions include:

• Notice: An initial warning issued to the supplier.
• Administrative Fine: A monetary penalty, with doubled amounts for repeated violations.
• Temporary Administrative Closure: Closure lasting between 24 hours and 90 days.
• Suspension of Activity: Full or partial suspension for 24 hours to 90 days.
• Revocation of License: Withdrawal of license and removal from the commercial registry.

Significant Penalties:

1. According to Article 8(4) of the new consumer law, if the supplier fails to issue the invoice in the Arabic language, the supplier may face a fine of AED 100,000.
2. Under Article 11, failure of the supplier to provide the consumer with the warranty document may result in a fine of AED 100,000.
3. Article 20 stipulates that failure to advise both the concerned body and the consumer of potential harms and protection measures may lead to a fine of AED 500,000.
4. Article 24(2) states that closing the return file without obtaining permission from the concerned body could result in a fine of AED 1,000,000.
5. Failure to provide an alternative commodity in case of a supplier-responsible failure, according to Article 27(2), may lead to a fine of AED 500,000.
6. According to Article 28(1), failure to provide a new alternative commodity or its value in case of a recurrent failure during the warranty period may result in a fine of AED 500,000.
7. Article 18 outlines that failure to provide periodical maintenance services for the warranted commodity could result in a fine of AED 300,000.
8. Article 32(d) specifies that selling commodities or services at prices lower than the cost price to create a monopolistic condition may result in a fine of AED 100,000.
9. Under Article 32(a), discrimination between consumers in the sale of commodities or utilization of services could lead to a fine of AED 100,000.
10. Article 32(b) mentions that hiding or abstaining from selling a commodity, imposing conditions irrelevant to the original dealing, may result in a fine of AED 200,000.
11. According to Article 32(h), purchasing competing commodities or services from the market to control prices may lead to a fine of AED 100,000.

Conclusion:

These amendments and regulations, detailed by the Ministry of Economy, aim to restrict monopolistic practices and safeguard consumer rights. The authorized imposition of administrative sanctions and financial penalties ensures adherence to these guidelines, promoting a fair marketplace favourable to consumer welfare.

Author

Dr. Hassan Elhais, legal consultant in Dubai along with his team of legal consultants and prominent local lawyers across the UAE, has made a name for himself as a renowned specialist in the fields of civil law, construction law, banking law, criminal law, family law, inheritance law, company incorporation, and arbitration.