Commercial fraud in Saudi Arabia

Commercial fraud in Saudi Arabia

Commercial fraud is an economic crime that directly affects consumer confidence and fair competition in markets. Therefore, the legislator in the Kingdom of Saudi Arabia has paid special attention to this issue by issuing an anti-commercial fraud system aimed at protecting consumers, ensuring the safety of products traded on the market, and holding accountable anyone who deliberately misleads consumers or manipulates product characteristics. This includes various forms of deception related to the nature, source, components or quality of the product.

What is meant by commercial fraud in the Saudi system?

The concept of commercial fraud in the Saudi system is not limited to selling a non-original product only, but also includes any change or manipulation that occurs in the product that leads to concealing its truth or misleading the consumer about it.

A product is considered adulterated if it is tampered with or altered, causing it to lose some of its material or moral value, whether by adding, subtracting, or changing its elements, characteristics, source, properties, quantity, weight, size, or other essential qualities. This also includes products that do not conform to the standard specifications approved in the Kingdom.

Accordingly, commercial fraud is not limited to the manufacturing process alone, but may occur at multiple stages, such as packaging, display, sale, import, or even storage, with the intent to trade in the adulterated product.

What are the forms or cases of commercial fraud?

The Anti-Commercial Fraud System has identified a number of acts that violate the system and constitute various forms of commercial fraud, the most prominent of which are:

• Deceiving the consumer about the nature, type, components, or essential qualities of the product.
• Misleading the consumer about the true source or origin of the product.
• Manipulating the amount of product such as weight, measure, or number.
• Selling or displaying counterfeit products in the markets.
• Possession of counterfeit products for the purpose of trading them.
• Manufacturing or producing products that do not conform to the standard specifications approved in the Kingdom.
• Using packaging, labels, or covers that violate standard specifications, which leads to misleading the consumer.
• Importing counterfeit products or trading them in the market.

These images indicate that liability is not limited to the manufacturer alone, but may extend to the supplier, distributor, or merchant who trades the adulterated product.

Legal advice from the office of lawyer Abdul Majeed Al Rashid in commercial fraud cases helps you gain a clearer legal understanding.

What are the elements of the crime of commercial fraud?

For the crime of commercial fraud to be established as a system, a set of basic pillars must be present that constitute the crime.

The physical corner

It is an act that constitutes fraud or deception, such as selling, displaying, or possessing an adulterated product with the intent to trade, or manipulating the product’s characteristics, quantity, or source.

Moral pillar

It is represented by the perpetrator knowing the truth about the product or performing the act with the intention of misleading or deceiving.

Crime scene

It is the product being adulterated, whether it is a food, industrial, consumer commodity or any product traded in the market.

The system assumes that the violator knew about commercial fraud, and the buyer’s knowledge of fraud does not prevent the penalty from being applied to the violator.

Regular liability in commercial fraud crimes

Liability for commercial fraud crimes is not limited to the person who committed the act directly, but may extend to several parties associated with the commercial activity. The seller, the person dispensing the product, or the director of the company or institution may be responsible for violations that fall within the scope of his activity, unless it is proven that the violation occurred due to a reason beyond his control.

This aims to strengthen oversight within commercial establishments and hold those responsible for commercial activity responsible for ensuring the safety of traded products.

What is the penalty for commercial fraud in Saudi Arabia?

The Anti-Commercial Fraud Law sets clear penalties to deter perpetrators of this crime. Anyone who commits any of the violations stipulated in the law shall be punished by imprisonment for a period not exceeding two years, or a fine not exceeding five hundred thousand riyals, or by one of these two penalties.

The penalty shall be increased to imprisonment for a period not exceeding three years or a fine of up to one million riyals, or both, in certain cases, such as the use of tools or means intended for fraud, or if the adulterated product or the materials used in it are harmful to human or animal health.

Supplementary penalties in commercial fraud cases

In addition to the basic penalties, the court may issue a number of supplementary penalties depending on the nature and circumstances of the violation, the most prominent of which are:

• Closing the store or facility where the violation occurred for a period not exceeding one year.
• Destroy or dispose of counterfeit products appropriately.
• Confiscation of tools or means used in fraud.
• A summary of the conviction issued at the violator’s expense was published in the region’s newspaper.
• As well as deporting illegal workers from the Kingdom and not allowing them to return to work in the case of residents.

These penalties aim to prevent recurrence of the violation and protect the market and consumers from counterfeit products.

What are the rights of those affected by commercial fraud?

The impact of commercial fraud is not limited to criminal penalties only, but also extends to protecting the rights of the affected consumer.

The system obligated the violator to withdraw the adulterated product from the market and return its value to the buyer, while the injured party retained his right to claim compensation for the damages he suffered as a result of the violation.

How can I report cases of commercial fraud?

Cases of commercial fraud can be reported through the competent authorities in the Kingdom, such as the Ministry of Commerce, through the “Receiving a Commercial Report” service, which receives reports related to adulterated products or those that violate standard specifications.

After the report is filed, the competent authorities verify the violation and take regulatory measures, which may include inspection, drawing samples from suspected products, and analyzing them to ensure their compliance with approved specifications.

Legal advice in commercial fraud cases from the office of lawyer Abdul Majeed Al Rashid

Commercial fraud cases can be complex in some cases, especially if they involve more than one party or when proof of harm or knowledge of the best way to handle the case is needed. Therefore, the office of lawyer Abdul Majeed Al Rashid allows obtaining legal advice from lawyers licensed by the Ministry of Justice, where any legal inquiry related to commercial fraud cases can be raised and legal guidance can be obtained that helps understand the legal situation and deal with the case in accordance with the systems in force in the Kingdom.

Finally

Commercial fraud is one of the violations that the Saudi regime deals with seriously because of its negative effects on consumers, the economy, and the commercial market. Therefore, the Anti-Commercial Fraud System has established provisions aimed at reducing these practices and punishing their perpetrators, in addition to providing legal protection to those affected.