????? ???? ??????? ?? ???????? - Penalty of Commercial Fraud in the UAE

The United Arab Emirates takes the initiative in issuing laws which purpose is to protect citizens and residents on its territory. The UAE is considered one of the most important commercial centers internationally, as the UAE has many markets that accommodate various goods, commodities and services. Therefore, the UAE imposes many regulatory restrictions that work on protecting the consumer to not being deceived or cheated. It is worth noting that one of the most important laws supporting the idea of protecting consumer in the UAE from exposure to commercial fraud is Federal Law No. 19 of 2016 regarding the Anti- commercial fraud in the Emirates, and its executive regulations issued by Cabinet Resolution No. 11 of 2020 AD; since in this article, dear reader, we will explain what commercial fraud is in the Emirates, and what are the penalties that are applied in the event of committing any of the commercial fraud crimes within the UAE.

What is commercial fraud in the UAE?

Commercial fraud in the UAE can be defined as carrying out an act aimed at Deception of one of the customers by any means whether by changing or altering the goods or their amount or nature or price or their material description or origin or source or fitness or any other matter related thereto, or presenting un true or misleading trading information on the promoted products; Such commercial fraud includes fraud, imitation and cheating by doing service which does not conform with the applicable laws or may include false and misleading statements. Commercial fraud also means changing or modifying the natural basis of material or a commodity that has been prepared for sale, in a way that affects its original essence or its basic properties. Moreover, the UAE Federal Law no. 19 of 2016 AD in the matter of the Anti- commercial fraud has defined the same according to what was stated in the first article of the aforementioned law as deceiving one of the customers by any mean; by altering or changing the nature of commodities that include every natural material or animal, agricultural, industrial or transformational product, its quantity, type, price, essential characteristic, origin, source, validity or any other matter related thereto, or presenting commercial information that is not true or misleading about the promoted products, including fraud, which is the use of verbal or actual deceptive means by one of the contracting parties to force the other party to enter into contract, or one of the contracting parties deliberately remains silent regarding an incident, misunderstanding, or defect in the commodity if it is proven that the other party would not have entered into the contract if it is aware thereof. Commercial fraud in the Emirates also includes imitation and service fraud that is not consistent with the laws in force within the state or involves false or misleading information.

What are the acts considered to be commercial fraud in the UAE?

The second Clause of Article 2 of the Anti-Commercial Fraud Law in the UAE clarified that it is considered commercial fraud to perform any of the following acts:-

1-     Importation or export or re-export or manufacture or sell or offer for sale or possession with the intent to sell or store or rent or marketing or circulation of fraudulent, corrupt or counterfeit goods. 

It is worth noting that counterfeit goods in the UAE are goods that do not comply with the controls, conditions, requirements, specifications, and standards determined by the laws, regulations, systems, and decisions in force within the state, or goods that have been altered, whatever their type, shape, source, or nature, without obtaining the required approvals, or that it is advertised or promoted in a way that is contrary to its truth.

Spoiled goods are goods that are no longer fit for use due to storage or transportation factors, exposure to other natural factors, or violation of the conditions specified in the approved laws, regulations and technical specifications, including damaged goods. As for fake/ counterfeit goods, they are goods that bear without permission a trademark identical or similar to the legally registered mark.

2- Advertising imaginary or unreal prizes or discounts.

3- Exploiting commercial advertisements, presenting them, or promising to present them in misleading promotion, incorrect advertising, or promoting fake, corrupt, or counterfeit goods.

4- Offering, presenting, promoting or advertising counterfeit commercial services.

What is the penalty of commercial fraud in the UAE?

The penalty for commercial fraud in the UAE is set forth in Article Twelve of the Anti-Commercial Fraud Law in the UAE, whereby whoever commits the crime of commercial fraud in the UAE shall be punished with imprisonment for a period not exceeding two years, and a fine of not less than Dirham fifty thousand and not more than UAE Dirham two hundred and fifty thousand, or either of these two penalties/ punishments.

Furthermore, Article thirteen of the same law clarified the penalty of attempting to commit commercial fraud, which is imprisonment for a period not exceeding one year, and a fine of not less than ten thousand dirhams and not more than one hundred thousand dirhams, or either one of these two penalties/ punishments.

In addition, in the event that commercial fraud is committed or attempted and its source is food for humans or animals, medical drugs, agricultural crops, or organic food products, the penalty shall be in accordance with Article Fourteen of the Anti-Commercial Fraud Law in the Emirates, which is the imprisonment for a period not exceeding two years, and a fine of not less than two hundred fifty thousand UAE dirhams and not exceeding one million dirhams, or either of the two punishments.

As stated in Article Fifteen of the Anti-Commercial Fraud Law in the UAE, whoever disposes of goods under custody in any manner without obtaining approval or permission from the sub-committee shall be punished by imprisonment for a period not exceeding six months and fine equivalent to two times of the value of the goods disposed of.

 In the event that the goods disposed of are human or animal food or medical drugs or agricultural crops or organic agricultural products, the punishment shall be imprisonment for a period not exceeding two years and a fine of not less than two hundred fifty thousand dirhams and not exceeding one million dirhams, or either of the two punishments.

It is worth noting that the trader is not exempted from the penalty under Article 16 of the Anti-Commercial Fraud Law in the UAE, because the buyer knows that the commodity is fake, corrupt or counterfeit.

In cases where the subject of the crime of commercial fraud is food for humans or animals, medical drugs, agricultural crops, or organic food products under Article 17 of the same law, the court shall order the confiscation or destruction of the food, medical drugs, crops, products, and tools used, and also order by publishing the judgment at the convict’s expense in two local daily newspapers, one of which is in Arabic language. The court is also entitled, according to Article 18 of the same law, to order, in addition to the prescribed penalty/ punishment, to close down the offending establishment for a period not exceeding six months,

Likewise, Article Nineteen of the UAE Anti-Commercial Fraud Law stipulates that, Without prejudice to any more severe punishment in any other law, whoever violates any other provision of this law and its implementing regulation shall be punished by fine not exceeding fifty thousand dirhams.

As for the punishment for re-committing commercial fraud in the UAE, Article 20 of the same law stated that, in addition to imposing the prescribed punishment, the court shall, in the event of re-committing commercial fraud in which its source is food for humans or animals, medical drugs, agricultural crops, or organic food products, the court shall cancel the license. The court, in the event of repetition of violation of the provisions of the Anti-Commercial Fraud Law in the Emirates, has the right to double the prescribed punishment, or add the close down of the shop or cancellation of the license to the prescribed punishment.

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