E-commerce has become a part of daily life, allowing consumers to easily purchase products or obtain services through websites and applications. With the proliferation of this type of commerce, a need arose to establish rules governing the relationship between online stores and consumers, clarifying the rights and obligations of each party. Consequently, the E-Commerce Law was enacted in the Kingdom of Saudi Arabia via Royal Decree No. (M/126), dated 7/11/1440 AH, with the objective of regulating electronic transactions, protecting consumers, and fostering confidence in this sector.
Definition of E-Commerce and Scope of the Law
Article 1 of the E-Commerce Law defines e-commerce as an economic activity conducted—wholly or partially—by a service provider and a consumer using electronic means, for the purpose of selling products, providing services, advertising them, or exchanging data related to them. This definition clarifies that the law is not limited to the online sale of products; it also encompasses the provision and advertising of services via electronic means.
Article 2 defines the scope of the law to include service providers operating within the Kingdom, as well as those based outside the Kingdom who offer products or services to consumers within the Kingdom by making them accessible. It also applies to the consumers themselves. The purpose of this is to regulate electronic transactions and provide legal protection to all parties covered by the law.
Obligations of the Service Provider
The law ensures that consumers have access to essential information before completing a purchase. According to Article 6, a service provider must disclose their details on the online store—such as their name, address, and contact information—along with their commercial registration (or any other publicly accessible registration, if applicable) and any other information specified by the executive regulations. This requirement does not apply if the service provider is registered with an authorized online store verification entity.
Article 7 mandates that the service provider disclose the terms and procedures of the contract, the essential characteristics of the product or service, and the total price—inclusive of all fees, taxes, and any additional delivery charges. Furthermore, the provider must outline arrangements for payment, delivery, and fulfillment, as well as provide details regarding any applicable warranties.
Additionally, Article 8 stipulates that, upon the conclusion of a contract, the consumer must be provided with an invoice detailing the cost of the product or service, the total price, and information regarding delivery, in accordance with the executive regulations. These requirements assist consumers in understanding the specifics of their purchase and help prevent disputes that might otherwise arise from a lack of information.
Regulation of Electronic Advertisements
While advertisements play a significant role in informing consumers about products and services, some may contain inaccurate or exaggerated information that could influence purchasing decisions. Consequently, the E-Commerce Law regulates such advertisements and establishes controls designed to protect the consumer.
Under Article 10, an electronic advertisement is considered a contractual document that complements the contract and is binding upon the parties involved. Furthermore, such advertisements must include the required information regarding the product or service, as well as the party providing it. Furthermore, Article 11 prohibits the inclusion of false claims or statements in electronic advertisements that could deceive or mislead consumers. It also forbids the use of any trademark for which the service provider does not hold the right of use, as well as the use of any counterfeit trademark.
Additionally, Article 12 authorizes the Ministry of Commerce to compel a service provider to rectify a violation or withdraw an advertisement within one day of being notified—provided that a breach of the stipulated provisions is established—without prejudice to any other penalties prescribed by law.
Consumer Protection and Rights
A significant matter addressed by the regulation is the protection of consumers’ personal data. Under Article 5, service providers are required to maintain the privacy of such data, protect it, and refrain from retaining or using it in any manner that violates legal provisions.
The regulation also addresses the consumer’s right to rescind a contract in specific circumstances. Article 13 governs this right, allowing a consumer to rescind a contract within seven days of receiving a product or the date of entering into a service agreement, provided that the consumer has not used the product, benefited from the service, or otherwise derived any advantage from them—subject to the exceptions outlined in the article. The consumer bears the costs associated with the rescission, unless the parties to the contract agree otherwise. Furthermore, this right does not apply in the cases excluded under the second paragraph of Article 13, which include products manufactured at the consumer’s request, software that has been used or downloaded online (under specific conditions), and services related to accommodation, transportation, or catering. The regulation also addresses instances where a service provider fails to fulfill their obligations in a timely manner. According to Article 14, a consumer may terminate the contract if the delay exceeds fifteen days from the date of the contract’s conclusion or the agreed-upon date—unless the parties have otherwise agreed on a different timeframe—excluding cases of *force majeure*. In such an event, the consumer is entitled to a refund of payments made, as well as compensation for costs incurred due to the delay, in accordance with the provisions of this Article. Furthermore, the service provider is required to notify the consumer of any anticipated delays or difficulties that may impede the execution of the contract.
Violations and Penalties
The regulation specifies the penalties applicable in the event of a violation of its provisions. Under Article 18, these penalties include a formal warning, a fine not exceeding one million riyals, the temporary or permanent suspension of e-commerce activities, and the partial or total blocking of an online store, in coordination with the competent authority.
Article 19 stipulates the formation of one or more committees tasked with reviewing violations of the regulation and its executive bylaws, and imposing the prescribed penalties. In determining the appropriate penalty, several factors are taken into account, including the gravity of the violation, whether it is a repeat offense, the scale of the service provider’s business, and the damage resulting from the violation.
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