E-commerce is integral to the success of Saudi Arabia’s Vision 2030 because, through it, the country aims to diversify its economy, create an attractive investment climate, and nurture entrepreneurship and job opportunities.
On 24 October 2019, the Ministry of Commerce & Investment (MOCI) established procedures and conditions to regulate the E-commerce sector in Saudi Arabia, now known as the E-commerce Law. With its enactment, the country defined the legal framework for conducting e-commerce trade to protect all stakeholders involved, be they business owners or consumers.
This law remains in effect to this day. For this reason, if you plan to start an online business in Saudi Arabia, either by taking advantage of e-commerce channels like Amazon Seller KSA or creating your own website and operating independently, you need to learn what this law entails and understand your rights and obligations, as well as those of your customers.
The Main Pillars of the E-commerce Law in Saudi Arabia
Below are the key focus areas that the e-commerce law covers in Saudi Arabia:
1. Information Disclosure
Saudi Arabia’s e-commerce law sets out precise guidelines on the information e-stores must present to customers. In this case, the term e-store includes both any platform through which a transaction can be made and platforms that offer or promote goods and services.
This information must consist of essential details, such as:
- the name (person or entity) and address of the e-commerce service provider;
- its commercial registration number (if applicable);
- an email address or contact number to contact the e-commerce service provider.
Furthermore, this law requires e-commerce stores to give custospecific contractual terms and conditions. The following must be included
- The procedure of entering into and concluding the contract.
- Information on the characteristics of the subject goods or services.
- The total price (including all fees, taxes and additional amounts for delivery).
- Information on payment and delivery/performance, as well as any relevant license or permit information.
It will also be required for all customers to receive an invoice confirming the itemized cost of the purchase, the date and time of delivery, and any other necessary
2. Digital Advertising
Besides customer protection, the law also states minimum requirements for digital advertising by e-commerce service providers.
A few details that every electronic advertising effort by a service provider must include are:
- Name of the advertised goods and services.
- Name and contact details of the service provider.
- Any other information required by the executive regulations.
If an e-commerce provider fails to include this information in their digital advertisement, and MOCI tells them to reflect it, the request must be addressed within one day of notification.
The e-commerce law also prohibits the following in electronic advertisements:
- False offers, statements, or allegations intended to deceive or mislead customers.
- Use of logos or trademarks without the authorization of the owner, as well as utilizing counterfeit trademarks like IP-infringing content.
Again, MOCI reserves the right to request an e-commerce service provider to remove or alter any misrepresentative or fraudulent advertisement, and it must comply within one day of notification.
3. Contract Termination
The law also defines when customers will be authorized to rectify errors in their electronic transactions. Of course, shoppers have the right to terminate contracts in cases where goods are faulty, and if there is a delay in the delivery of the products or services by more than 15 days.
In this case, the law states that e-commerce service providers must notify consumers of anticipated delays or complications that may affect delivery. Additionally, customers can terminate within seven days from the date the subject goods are delivered if they haven’t used the products or benefitted from the services.
On the other hand, a customer cannot avail themselves of this right to terminate under certain circumstances. These scenarios include when a transaction relates to goods subject to the customer’s own specifications, physical media that has been used, online software, newspapers, magazines, publications, and books.
Furthermore, transactions can’t be terminated if they involve services for accommodation, transportation, or catering, or if the goods are damaged by the customer.
4. Customer Data
The law also regulates how consumer data is collected, used, and stored. It specifies that the service provider is not allowed to retain the personal data or electronic communications of the customer beyond the period for the transaction.
During this time, they must ensure the confidentiality and protection of the data. This means that information collected for a specific transaction cannot be utilized for other purposes, like marketing, without having the customer’s explicit consent.
The responsibility of protecting customer data or electronic communication falls on the service provider and extends to any third parties (and agents) they deal with.
Penalties and Violations
If an e-commerce service provider violates this law, then MOCI is authorized to block access to it and to transfer the issue to a committee. This body will consider these violations and decide on penalties by examining the seriousness of the breach, the size of the business and whether it is a recurring issue.
In addition to blocking access, other penalties allowed under the law include:
- The publication of the details of the violation in a relevant local newspaper at the service provider’s expense.
- Temporary or permanent suspension of their commercial registration.
- A maximum fine of SAR1,000,000 (about USD 270,000).
Operating an E-Commerce Business in Saudi Arabia
The e-commerce law applies to locally licensed e-commerce service providers, Saudi-based individuals, and foreign e-commerce service providers doing business in Saudi Arabia.
For budding entrepreneurs, minding and carefully implementing such rigorous requirements throughout their independent, self-run website to comply with the e-commerce law can be a lot to take on.
Alternatively, through the Amazon KSA Seller registration process, you create an account and enjoy unparalleled support for your business from day one, including built-in data security, marketing tools, access to millions of customers and inherent adherence to the e-commerce law in Saudi Arabia.
Whichever route you choose, remember that this law aims to protect your rights and those of your online shoppers, so following it will only increase customer trust and keep your e-commerce venture secure.