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A Comprehensive Overview of the 2023 Commercial Fraud Law
The new law aims to protect consumers, preserve goods' integrity, and promote fair trade practices in the UAE.
Article 1 of the Federal Decree-Law No. 42/2023, describes the term Adulterated Goods, Spoiled Goods, and Counterfeit Goods.
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- Adulterated Goods: Goods that have changed, resulting in a loss of material or moral value, either through addition, reduction, or alteration in various aspects.
- Spoiled Goods: Goods that are no longer suitable for exploitation, use, or consumption, either in whole or in part.
- Counterfeit Goods: Goods that bear a trademark without authorization, and such trademark is identical or similar to a legally registered trademark.
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- Importing, exporting, producing, displaying, selling, storing, transporting, marketing, trading, promoting, merchandising, or possessing with the intent to sell Adulterated, Spoiled, or Counterfeit Goods is prohibited.
- Attempts to engage in any of these actions are forbidden.
- Violations include importing with fraudulent intent, misleading or counterfeiting information, possession or trading of such goods, using tools for fraudulent preparation, modifying goods, and engaging in prohibited packaging, distribution, storage, or transportation.
- False or misleading descriptions, advertisements, or displays of these goods are also considered violations.
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- Suppliers and Competent Authorities are authorized to initiate the withdrawal of adulterated, spoiled, or counterfeit goods from the market and stores.
- Suppliers are obliged to dispose of or return such goods and bear associated costs to safeguard public health and safety.
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- Suppliers are obligated to refund the value of adulterated, spoiled, or counterfeit goods or exchange them based on the customer's preference.
- Suppliers may not escape penalties by claiming consumer awareness of the fraudulent nature of goods, emphasizing accountability for product quality.
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- Suppliers are required to submit mandatory commercial books and related documents upon request, promoting transparency in business operations.
- Labelling goods per UAE laws is mandated, ensuring consumers receive accurate information about products.
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- Authorized employees have law enforcement capacity, with the right to inspect business establishments, warehouses, and other relevant locations.
- Provisions for preventive measures during inspections are in place, ensuring occupational health and safety, and emphasizing the commitment to maintaining standards in commercial practices.
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- Violations of Articles (4), (5), (8), and (11) may result in imprisonment of up to 2 years and fines ranging from AED 5,000 to AED 1,000,000.
- Aggravated offences may lead to imprisonment and fines between AED 100,000 and AED 2,000,000, along with mandatory confiscation or destruction of illegal goods.
- Personal accountability extends to managerial roles, facing similar penalties if awareness or breach of duties contributes to the offence.
- Repeated offenders may face doubled penalties, and the offending establishment may be closed for up to 1 year, strengthening prevention against repeated violations.
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- Suppliers may have the right to petition the Competent Court for the release of seized or detained Goods.
- The Court may order release within 24 hours if the Supplier presents evidence of the Goods' perishable nature, samples for testing, and ensures no risk to public health.
- If no order upholding detention is issued within 45 days (20 days for perishable Goods), the Goods may be released.
- The Ministry or Competent Authority may initiate conciliation for violations, with specific procedures outlined in the Implementing Regulation.
- Article 23 outlines grievance and appeal procedures, allowing interested parties to file written grievances within 15 days of a decision, with a final decision expected within 30 days.
- An appeal to the Competent Court may be allowed within 30 days of being notified of the decision or the delay of the grievance period.