With the digital transformation currently sweeping across all sectors, reliance on the internet for buying and selling has increased, making e-commerce one of the most important economic sectors in the Kingdom of Saudi Arabia. Keen to keep pace with this development, the Kingdom issued the E-Commerce System, which serves as a framework defining and regulating the relationship between e-commerce service providers and consumers, aiming to achieve transparency, flexibility, and enhanced trust in electronic transactions.

The Concept of the E-Commerce Law

The E-Commerce Law in Saudi Arabia was issued by Royal Decree on 7 Dhu al-Qi'dah 1440 AH (corresponding to July 2019). Its provisions are overseen by the Ministry of Commerce. The system consists of 26 articles, all of which aim to monitor and regulate e-commerce activities. Article 1 of the system defines e-commerce as: "An economic activity undertaken by a service provider and a consumer – wholly or partially – through electronic means, for the purpose of selling products, providing services, advertising them, or exchanging data related to them."

The system includes a set of rules and regulations governing the practice of e-commerce activities through various electronic means, such as online stores, digital platforms, and applications. It also aims to protect consumer rights, define the obligations of merchants, and ensure trust and fairness in electronic transactions within the Kingdom.

Provisions of the E-Commerce Law

The main objective of issuing the E-Commerce Law in Saudi Arabia is to regulate the relationship between merchants and consumers, as clearly demonstrated in its provisions, as follows:

First: Conducting E-Commerce Activities

- E-commerce may be conducted within the Kingdom through any electronic means specified in the law; an online store, platform, application, etc.

- Every merchant conducting e-commerce activities inside or outside the Kingdom is subject to this law, as long as they target Saudi consumers.

- The merchant is obligated to comply with other regulations related to e-commerce, such as the Consumer Protection Law, the Data Protection Law, and other relevant regulations.

Second: The E-Commerce Merchant

• Data Disclosure: Article Six of the law obligates the service provider to disclose their name, address, contact information, and commercial registration, if applicable.
• Clarification of Contract and Product Details: Article 7 of the regulations stipulates the necessity of providing the consumer with a statement clarifying the essential characteristics of the products or services, the total price, payment and delivery arrangements, and warranty information.
• Exchange and Return Policy: The consumer's right to cancel the contract (return the product) is regulated under Article 13 of the regulations, and the merchant must clarify this policy within the contract terms.
• Protection of Consumer Data: This is one of the most important obligations, as emphasized by Article 5 of the regulations and Article 5 of its implementing regulations, which prohibit the use of the consumer's personal data for unauthorized purposes or its retention for a period exceeding what is required by the nature of the transaction.

Third: Protecting Consumer Rights

• Right to Return: Article 13 of the regulations grants the consumer the right to cancel the contract and return the product within 7 days of the date of receipt (with specific exceptions).
• Refund of Payment: This right is a direct result of exercising the right to cancel the contract or in the event of the merchant's breach of its obligations. • Protection from Misleading Advertising: Article 10 of the Implementing Regulations stipulates that advertisements must clearly state that they are "advertising material" and provide information that enables consumers to make informed decisions. This prevents deception and fraud.
• Access to Clear Information: This is guaranteed by Article 7 of the Regulations.

Fourth: Electronic Commercial Advertising

- Advertisements must be clear and not misleading.

- Advertisements are not permitted to contain any false information intended to deceive consumers.

- The merchant is responsible for the credibility and accuracy of the information in advertisements displayed on their platform.

- Consumers must be able to request to stop receiving advertisements.

Fifth: Consumer Data Protection

• Confidentiality and Non-Use Without Consent: Article 5 of the Regulations explicitly states that "Service providers may not use consumers' personal data or electronic communications for unauthorized or impermissible purposes, or disclose them to any other party… except with the consumer's consent."
• Data Retention Period: The same article specifies that data may only be retained for the period required by the nature of the transaction.
• Securing Payment Methods: This falls under the public service provider's obligation to protect consumers' personal data, in addition to the cybersecurity obligations stipulated in Article 18 of the Executive Regulations for Electronic Platforms.

Penalties for Non-Compliance with the E-Commerce Law in Saudi Arabia

The E-Commerce Law in Saudi Arabia includes a set of penalties for those who violate its provisions and its executive regulations. These penalties include:

- Issuing a warning to the violator.

- Imposing a fine not exceeding one million Saudi Riyals.

- Permanently or temporarily suspending the business activity, depending on the case.

- Blocking the online store or shop, either partially or permanently.

In the event of a violation, one or more committees will be formed by a decision of the Minister of Commerce to review the violations. Finally, given the obligations and penalties stipulated by the E-Commerce Law, compliance is no longer optional but a necessity for anyone conducting e-commerce activities within the Kingdom.

To avoid these errors and violations or legal repercussions, engaging a reputable and specialized law firm remains essential to ensure the protection of your business. Therefore, we at Mohammed Al-Khliwi Law Firm are pleased to offer our assistance to e-commerce practitioners, helping them take the correct legal steps from the outset. Contact us to be your legal partner and help you manage your business Trade with confidence and security.

Disclaimer: The above content does not constitute legal advice, and the firm assumes no legal responsibility. For legal advice, please contact us.