RIYADH: Saudi Arabia’s Ministry of Commerce has taken action against 44 commercial establishments for organizing contests and sales promotions without the necessary licensing.
These businesses have been referred to the Public Prosecution for potential penalties under the Anti-Commercial Fraud Law.
The ministry underscored the legal requirement for brick-and-mortar businesses and online stores to obtain a license before conducting contests or offering discounts.
Failure to comply with these regulations constitutes a violation of the Anti-Commercial Fraud Law.
The ministry said it actively monitors compliance, aiming to identify violations and prevent deceptive or misleading practices that could harm consumers.
Under the Anti-Commercial Fraud Law, violators can face severe penalties, including imprisonment for up to three years and fines of up to SR1 million ($266,427).
Additionally, the law permits the publicizing of violators’ names after definitive judicial rulings are issued by the competent courts.
The Anti-Commercial Fraud Law was originally issued in 2008, with its latest amendment approved in 2019 to enhance its effectiveness in addressing evolving commercial fraud issues.
The law was established to address a growing need for consumer protection in the face of increasing commercial activities, both in traditional marketplaces and online.
It aims to ensure transparency, fairness, and legality in commercial transactions by imposing strict penalties on businesses that engage in fraudulent practices such as misrepresenting products, false advertising, and conducting unlicensed promotions or contests.
By enforcing this law, the Saudi government seeks to maintain a trustworthy market environment, safeguard consumer rights, and uphold fair competition among businesses as the commercial sector grows.
Vision 2030 is transforming the Kingdom’s commercial sector by enforcing regulations like the Anti-Commercial Fraud Law.
The undertaking aims to increase the private sector’s contribution to the gross domestic product from 40 percent to 65 percent and boost non-oil exports from 16 percent to 50 percent of the non-oil GDP.
It also seeks to attract more foreign direct investment, targeting an increase from 3.8 percent to 5.7 percent of GDP. These initiatives drive market transparency, ensure legal compliance, and foster a more diverse and competitive economy.
In March, the ministry initiated punitive measures against several commercial establishments and individuals for organizing retail lottery prize draws that required consumers to make purchases as a prerequisite for participation.
The ministry summoned the offending parties to proceed with legal actions before referring their cases to the Public Prosecution.
At the time, the ministry emphasized that businesses and individuals should not impose purchasing requirements for consumers to enter contests, offers, or raffles. Additionally, practices such as including a contest voucher within a product or raising prices during promotional events are prohibited.
The ministry reiterated that demanding payment or purchase as a condition for contest entry constitutes a lottery activity, which is banned in the Kingdom under current regulations.
