Service delivery, accountability key for e-commerce
The e-commerce marketplace in the UAE has rapidly expanded over recent years dramatically shifting the terms of access to goods and services for an increasingly techsavvy populous, however, lack of centralised structure and clear license requirements have allowed opportunists to emerge resulting, in some instances, in inferior service delivery and difficulty in enforce- ment of consumer protection.
Owing to new initiatives, accompanied with announcement of the new free zone designed to specifically house such operators, we may anticipate more streamlined service delivery and accountability over these platforms.
In establishing an e-commerce business, one of the chief considerations, second only to commercial concerns such as branding, product and design, should be the legal framework within which you intend to operate. Entities operating within the UAE are bound by certain regulations relating to electronic contracting and online sales under Federal Law No. 1 of 2006 (the electronic transactions and e-commerce law), as well as UAE Federal Law No. 15 of 1970 (the publications and publishing law) specifically governing content and advertising, amongst others.
E-commerce set up and licence registration in the UAE is currently permissible under a variety of trade alternatively service activities. Although entities are required to be registered, no strict licensing requirements exist and thus determining placement in the market has been at the option of the owner
In establishing an e-commerce business, one of the chief considerations, second only to commercial concerns such as branding, product and design, should be the legal framework within which you intend to operate
in consult with the authority with whom they register.
UAE based sites have previously been licensed either under the Dubai Economic Department, alternatively with one of the various free zones, however tracing the license holder and ensuring accountability of such entities becomes problematic where there is no uniform set of requirements or industry specific regulator poised to tackle misuse. Perhaps the most concerning aspect of decentralised licensing, is the difficulty in reaching the site concerned in the event of consumer complaint. The Dubai Economic Department has previously had the somewhat unenviable task in safeguarding consumer rights in such instances.
The recently implemented initiative of the DED Consumer Protection Department, the Consumer Protection Initiative, has sought to offer further security to the public in their access and use of e-commerce platforms.
Under the initiative, authorised sites are permitted to display the consumer protection logo adding comfort, authenticity and recourse to consumers in the UAE.
The initiative offers logo and promotion tools to those appropriately licensed websites and platforms that expressly undertake to abide by consumer protection laws and report to the authority as required. The initiative further allows ease of recourse in the event that complaint is lodged against a registered site providing enhanced consumer protection of the same degree to which consumers have come to expect from traditional “bricks and mortar” stores.
In addition to the Consumer Protection Initiative, announcement of launch of “Dubai CommerCity” the first e-commerce specific free zone in the Mena region, is welcome in providing a centralised option offering ease of compliance and uniformity throughout the electronic commerce industry operating out of and within the UAE. Following launch of the Free Zone it is envisaged that many e-commerce companies will set up a separate entity under the free zone to own and fully operate their e-commerce platform.
It is anticipated that the free zone will provide office facilities, as well as warehousing and storage space for businesses, thus providing consolidated operations for both companies and authorities in ensuring license compliance and streamlined delivery.
In an industry that has experienced exponential growth, increased regulation and centralised services should collude to maintain Dubai’s reputation as an international shopping destination and e-commerce hub in the Mena region.