Combating fraud in the United Arab Emirates

Updated: Dec 18, 2020

The issuance of executive regulations No. (11) for the year 2020 for Federal Law No. (19) for the year 2016 regarding combating commercial fraud


The UAE economy is considered to be one of the strongest regional economies, and one of the most promising economies at the global level; It is worth mentioning that the UAE economy is diversified, competitive and based on knowledge, and it must be noted that the systematic economic policies on which the UAE operates have contributed significantly to develop multiple sectors and industries to become an active partner in strengthening the national economy and promoting it, but commercial fraud is one of the most challenging issue that affects the economic sector and impacts it negatively, However, the UAE, and especially the Ministry of Economy, which contributes significantly to counter the commercial fraud, which is a global issue that exists in all countries and even economically strong ones, and which affects all economic and commercial sectors.


Therefore, it was necessary to point out that the Emirati legislator pays great attention to regulate the business affairs of merchants and traders through providing the legal guarantees necessary to protect the consumer, as the law’s provisions and regulation have addressed the issue of commercial fraud, through the enactment and enforcement of laws, and this was clearly evident by the issuance of Federal Law No. 19 For the year 2016 regarding combating commercial fraud (the “Law”), as article no. (2) stipulates that “1. The provisions hereof shall apply to whoever commits a commercial fraud act. The free zones in the State shall not be exempted from the provisions hereof.2. Any of the following acts shall be classified as a commercial fraud act:

  • Importing, exporting, re exporting, manufacturing, sale, exhibition, possession for the purpose of sale, storage, rental, marketing, or trade of adulterated, corrupted, or counterfeit goods.

  • Announcing untrue or unreal prizes or discounts.

  • Using, providing, or promising to provide commercial advertisements for the purpose of misleading promotion, incorrect publicity, or promotion of adulterated, corrupted or counterfeit goods.

  • Showcasing, providing, promoting, or advertising adulterated commercial services.


Furthermore the Commercial fraud has been defined in the Law as “An act of deceiving any customer in any way, whether through altering or changing the commodity's nature, amount, price, fundamental specifications, origin, source, validity or any other aspect related to the commodity, or providing untrue or misleading commercial information on the promoted products this includes the deception, counterfeiting and fraud of service that does not conform to the laws applicable in the State or involves fraudulent or misleading information." and thus it differs from fraud, which has been defined as" is the use of fraudulent, verbal or actual means by one of the contracting parties to induce the other party to contract, or One of the contracting parties intentionally kept silent about an incident, circumstance, or defect in the commodity if it was proven that the other party would not have entered into the contract if he knew about it.


From this we find that the definition of adulterated goods as defined by the law " The goods which do not conform to the controls, conditions, requirements, specifications and standards set by the laws, regulations, rules and resolutions applicable in the State or the goods to which a change is made regardless of their type, form, source or nature without obtaining the required approvals or those advertised or promoted in contrast with their essence." which differs from the definition of counterfeit goods, which are" The goods that bear, without permission, a trademark identical or similar to the legally registered trademark."


Commercial fraud is based on deception, and deception in the product as an offer or marketing it with false, deceptive, or misleading information in a manner that contradicts its reality. It becomes similar to embezzlement, theft, forgery, and the negligence of others.


The phenomenon of commercial fraud is a global phenomenon and most countries are working to activate their administrative and control systems to get rid of it. Commercial Fraud has significant negative impact on the economic sector in countries, as its leads to a disturbance of consumer confidence in the brand, which causes low levels of purchasing power.


Accordingly, the issuance and activation of Emirati laws regulate the market and protect the products from any fraud or tampering with their components, for example the fraud of foodstuffs bear a punishment of imprisonment for a period of two years and a fine of up to one million dirhams , furthermore article 19 of the Law stipulates that " Without prejudice to any more severe penalty prescribed in any other law, whoever violates any other provisions hereof, its Executive Regulations or the resolutions issued in implementation thereof shall be punished by a fine of not more than fifty thousand dirhams”


In addition, article 423 of the Federal Penal Code stipulates that “Without prejudice to any severer punishment, shall be punishable by confinement and fine or by one of these two penalties any individual who resorts to deception or fraudulent means in contracting with another person and disseminates information contrary to facts as to the nature or essential qualities of his goods, or to the elements of its composition, or as to the description or origin of his goods, in the cases where such information is the basic cause of contracting; as well as he who disseminates false statements with regard to the number, quantity, size, measure, weight or capacity of his goods or with regard to the goods themselves if it is established that there are discrepancies between the goods delivered and those contracted upon. Shall also be liable to the same penalty any individual who imports, purchases or promotes such goods with the intention to trade therein, with full knowledge of their reality”.


The Law stipulated in article 14 that “Whoever commits or attempts to commit the offense of commercial fraud, in case the subject of fraud is human food, animal feed, medical drugs, agricultural crops or organic food products shall be punished by imprisonment for not more than two years and/or a fine of not less than two hundred fifty thousand dirhams and not more than one million thousand dirhams”.


For the purposes of implementation of the Law, the Executive Regulation No. (11) for the year 2020 issued (the “Regulation”) with the aim of finding a unified federal mechanism to deal with cases of commercial fraud in the various emirates of the country, and expediting the settlement of cases of commercial fraud, in addition to define a clear mechanism for disposing of products in violation of the Law by re-exporting, destroying, or recycling these goods if possible, with the merchant bearing the expenses.


The Regulation includes provisions regarding the procedures of the competent authority to inspect fraudulent and spoiled goods, withdrawing adulterated goods from the market and how to dispose of them, and special controls have been put in place to destroy those counterfeit or spoiled goods, which must be done under the supervision of the subcommittee under several controls, the most important of which is a judicial order issued in this regard, bearing in mind that these goods are destroyed in a way that cannot be consumed again.

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