Advertising in E-Commerce

E-commerce in the Kingdom of Saudi Arabia has witnessed remarkable development in recent years as a result of the rapid digital transformation driven by Saudi Vision 2030. Electronic advertising holds significant importance as an effective tool for marketing products and services and for reaching a large segment of consumers through innovative methods. In this context, the E-Commerce Law was issued by Royal Decree No. (M/126) dated 07/11/1440 AH, along with its Implementing Regulations, to regulate e-commerce activities in the Kingdom, taking into account international best practices and ensuring the necessary level of protection for consumers and local investors.

Definition of Advertising in E-Commerce and its Binding Nature in Concluded Contracts

The E-Commerce Law defines electronic advertising as: “Any publicity conducted by a service provider through an electronic means, aimed at promoting the sale of a product or the provision of a service, either directly or indirectly.” The concept of a service provider includes both the merchant — defined as any person engaged in e-commerce and registered in the commercial register and the practitioner, who engages in e-commerce without being registered in the commercial register (1).

Since electronic advertising is considered a contractual document supplementing contracts and is binding upon the parties in accordance with the E-Commerce Law, it plays a role in shaping the contractual relationship, as well as the rights and obligations of the parties (2).

Given that contractual relationships are, in most cases, formed through offer and acceptance, and that electronic advertising constitutes a promise or an offer concerning a product or service (such as its specifications or price), it therefore forms part of the contract concluded between the advertiser and the consumer. Consequently, the advertisement is legally binding upon the advertiser, and the consumer has the right to demand fulfillment of what was stated in the advertisement or to claim compensation in the event of the advertiser’s non-compliance.

Regulations of Advertising in E-Commerce

Any person engaged in electronic advertising of a product or service must comply with the provisions of applicable regulations regarding advertisements in general and obtain the necessary licenses depending on the nature of the product or service (3). The electronic advertisement must include the following:

1. The name of the advertised product or service.
2. The name of the service provider, and any distinctive information identifying him, unless already registered with one of the e-store authentication authorities.
3. Means of communication with the service provider (4).
4. A clear statement indicating that it is an advertisement.
5. Relevant information enabling the consumer to make a clear and informed decision (5).

The electronic advertisement must not include:

1. Any offer, statement or claim that is false or phrased in a manner that may directly or indirectly deceive or mislead the consumer.
2. A logo or trademark which the service provider does not have the right to use, or an imitated mark (6).

In the event of violating the above regulations, the Ministry of Commerce and Investment may oblige the violator to remove the violation or withdraw the electronic advertisement within one day from the date of notification (7).

In application of the principles of consumer protection, the Implementing Regulations of the E-Commerce Law require the service provider to provide the consumer with a means to request stopping the sending of electronic advertisements to him, and the provider must cease sending them once such a request is received (8).

Penalties Prescribed for Violating the Regulations of Advertising in E-Commerce

Given that the regulations of electronic advertising are closely related to consumer protection in the Kingdom, the E-Commerce Law has stipulated strict penalties for violating any provisions of the Law or its Implementing Regulations. These include one or more of the following:

1. A warning.
2. A fine not exceeding (SAR 1,000,000) one million. 
3. Suspension of e-commerce activity temporarily or permanently.
4. Blocking the e-store – in coordination with the competent authority – partially or completely, temporarily or permanently (9).

The E-Commerce Law has further authorized the Minister of Commerce and Investment (or his delegate) to take, in urgent and necessary cases, a decision to block the trader’s or practitioner’s electronic platform, partially or completely, until the violation is rectified or adjudicated, whichever occurs first. The violation must be referred to a committee formed by a decision of the Minister of Commerce and Investment within a maximum of three (3) days from the date of blocking the electronic platform. The committee must issue its decision on the violation within a period not exceeding ten (10) days from the date of referral. The committee may also suspend the blocking decision, partially or completely, if it finds justification to do it(10).

What is the official legal definition of “electronic advertising” under the E-Commerce Law?

Under the Saudi E-Commerce Law, electronic advertising is officially defined as “any publicity conducted by a service provider through an electronic means, aimed at promoting the sale of a product or the provision of a service, either directly or indirectly”.

This definition is foundational to the law and carries several important legal implications:

• Broad Scope of Service Providers: The law applies to both merchants (those registered in the commercial register) and practitioners (those engaging in e-commerce without being registered).
• Legal Source: This specific definition is established in Article (1) of the E-Commerce Law.
• Binding Nature: Because of this definition, electronic advertisements are considered contractual documents that are legally binding upon the advertiser. They effectively form part of the contract between the merchant and the consumer, allowing consumers to demand fulfillment of the claims made in the ad or seek compensation if the advertiser does not comply

What are the four main types of penalties that can be imposed for violating the E-Commerce Law?              

The Saudi E-Commerce Law prescribes strict penalties for violating any of its provisions or its Implementing Regulations. A violator may be subject to one or more of the following four main types of penalties:

1. A warning:  This is the first level of penalty mentioned for non-compliance.
2. Financial fines:  A fine may be imposed, which can reach a maximum of SAR 1,000,000 (one million Saudi Riyals).
3. Suspension of activity:     The service provider’s e-commerce activity can be suspended temporarily or permanently.
4. Blocking the e-store:   In coordination with competent authorities, an e-store may be blocked partially or completely, and this block can be either temporary or permanent.

Additionally, the Minister of Commerce and Investment has the authority in urgent and necessary cases to block a platform immediately until a violation is rectified or adjudicated, with a mandatory referral to a specialized committee within three days.

Overview of Advertising in E-Commerce

The text outlines the regulatory framework for electronic advertising in Saudi Arabia as established by the E-Commerce Law and its specific guidelines. These regulations define digital advertisements as legally binding components of a contract ensuring that promotional claims regarding prices or features are enforceable by the consumer. To maintain market transparency service providers must clearly identify themselves, provide contact details and avoid any misleading or deceptive content. The law also grants consumers the right to opt-out of marketing communications and protects intellectual property by banning unauthorized trademarks. Violators face severe penalties, ranging from heavy financial fines to the permanent closure or blocking of their digital storefronts. Overall, these rules aim to foster a secure commercial environment by balancing the growth of digital trade with robust investor and consumer protections.

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Sources: 

1. Article (1) of the E-Commerce Law issued by Royal Decree No. (M/126) dated 7/11/1440 AH.
2. Paragraph 1 of Article (10) of the E-Commerce Law.
3. Paragraph 3 of Article (10) of the Implementing Regulations of the E-Commerce Law issued in 1441 AH.
4. Article (10) of the E-Commerce Law.
5. Paragraph 1 of Article (10) of the Implementing Regulations of the E-Commerce Law.
6. Article (11) of the E-Commerce Law.
7. Article (12) of the E-Commerce Law.
8. Paragraph 2 of Article (10) of the Implementing Regulations of the E-Commerce Law.
9. Article (18) of the E-Commerce Law.
10. Article (17) of the E-Commerce Law.