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Legal Hour on Drive Live.
These direct selling systems, what would you call them—direct selling projects? People get caught up in them and, according to this article, seem to lose out financially. First of all, what are they, and are they always dodgy?
Ludmila Yamalova
Not necessarily. In simple terms, direct selling is a scheme, a marketing structure where, for example, I sell certain goods and incentivize you to help me sell those goods, giving you a commission for every sale you make. That’s essentially what direct selling is.
The UAE—and Dubai in particular—actually has a Direct Selling Association or agency. This means the activity is licensed and not illegal. However, as with any licensing agency, there are regulations and requirements to become a registered direct-selling company. The direct-selling agency works with DED and other authorities or free zones that license similar companies. It’s a fairly elaborate licensing process.
There’s even a website listing companies currently legally licensed as direct-selling companies. At this point, there are only about 11 companies that are lawfully conducting this type of business.
In this particular case, investors or unaware members of the public were introduced to the idea of supplementing their income by introducing products further down the chain. The problem here was a joining fee, which, in some cases, was AED 10,000. Many participants, for whom this was a significant amount, even borrowed money or took credit card loans to join. The promise was that for every introduction made, they could earn a commission, say AED 1,200 per introduction. On paper, it seemed easy to recover the initial investment and make a substantial profit.
Host
One person thought they’d make AED 2.3 million but ended up losing AED 10,000. It feels like people are taking advantage of those who might not be aware of what’s possible.
Ludmila Yamalova
Exactly. In this case, the focus was more on collecting joining fees than on selling the product. That’s often a giveaway—when the emphasis is less about the business itself and more about gathering money from new participants.
As a general rule, if something sounds too good to be true, it probably is. Very few people succeed in making a lot of money from the comfort of their home in a short time.
Workshops and seminars make these schemes seem legitimate. These events create the impression that others are already successful, making it look like participants are joining a large, thriving network.
Host
They train you, give you confidence, and make you believe you’ll succeed.
Ludmila Yamalova
Absolutely. And this is why regulators need to step in to ensure companies engaging in such activities are legitimate. These schemes pop up frequently, and once regulators catch on, new regulations and enforcement measures are introduced. However, new schemes often emerge to take their place.
For consumers, my advice is:
- If something seems too good to be true, pause and think carefully.
- Before parting with your money, ensure you have proper documentation for every transaction.
- Always verify the legitimacy of the company.
For direct selling, check if the company is registered with the Direct Selling Association. This is crucial to avoid falling victim to fraudulent schemes.
Host
People often get drawn into these schemes through family and friends, which makes them harder to resist.
Ludmila Yamalova
Exactly. The emotional dynamic of family and friends makes this even more complex. That’s why strict licensing regulations exist—to protect consumers from such vulnerabilities.
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Legal Hour on Drive Live.
We’re in conversation with Ludmila Yamalova, Managing Partner at Yamalova and Plevka, answering your legal questions this evening.
Host
Mark says: “If I want to send a notice to my tenant through the Notary Public, can I send it to their office address, or does it have to go to the residential address stated on the tenancy contract?”
Ludmila Yamalova
Great question. This is particularly timely as the practice regarding notices has changed over the last several months. Previously, under Dubai rental laws, eviction notices had to be sent through the Notary Public, and only notices served this way were considered valid.
Now, the Rent Committee accepts proof that the notice was received by the intended recipient, regardless of whether it was sent to the residential or office address. This means you no longer need to use the Notary Public. You can use other means, such as email or any correspondence that confirms receipt of the notice.
The key is having documentation that the recipient received the notice.
Host
What about a WhatsApp notice? If you see the blue ticks, can that count as proof?
Ludmila Yamalova
Great question. WhatsApp messages with blue ticks can be presented as evidence, but it’s up to the judge to decide if that’s sufficient proof.
For an eviction notice, it’s not just about saying, “You’re evicted.” The notice must include the requisite legal language. If you send the notice as a PDF or image via WhatsApp, and it’s marked as read, it could be considered valid. However, you must ensure the notice complies with all legal requirements.
Host
Toriro asks: “I’ve moved into a new building but can’t get an Ejari because the building isn’t registered in the system. The agent doesn’t know anything. Please advise.”
Ludmila Yamalova
This is a tricky situation, and while I haven’t personally encountered this exact scenario, here’s what I’d recommend:
- Obtain the Title Deed
Make sure you get a copy of the property’s title deed. This is crucial to confirm the building’s ownership and registration with the Dubai Land Department (DLD). - Approach the Land Department
If you have the title deed, you can visit the DLD directly. Even if the building itself isn’t registered, the title deed should allow you to register an Ejari for your unit. - Contact the Building Owner
It’s possible that the entire building is owned by a single landlord and hasn’t been registered for individual unit ownership. If that’s the case, the landlord must take steps to resolve this. - Why Ejari is Essential
Ejari is now mandatory for registering utilities like DEWA. Without it, you may face challenges moving forward. This is why I recommend resolving this issue promptly.
If these steps don’t resolve the issue, consider seeking legal advice to determine if your rental agreement is valid and enforceable.
Host
Here’s a question about illegal downloading:
“I recently saw a story regarding downloading content through torrents. Many people download movies this way. What are the legal implications in the UAE?”
Ludmila Yamalova
This is a common question, especially in today’s digital age. While torrenting may seem widespread, it can violate several UAE laws. Let me break it down:
- Copyright Law
UAE Federal Law No. 7 of 2002 protects intellectual property. Downloading copyrighted content without authorization breaches this law. - Cybercrime Law
The UAE’s cybercrime law (amended in 2012) prohibits unauthorized access to digital content. Penalties include imprisonment of up to six months and fines ranging from AED 200,000 to AED 1 million. - Practical Reality
While the legal framework is strict, enforcement can vary. Most individuals downloading content for personal use are unlikely to face immediate legal consequences. However, large-scale violators or distributors may be targeted as an example to deter others.
The bottom line: Avoid torrenting and stick to licensed streaming platforms to stay within the law.
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Mark asks: “If I didn’t sign a contract but started working, am I bound by the three months’ notice period mentioned in the offer letter?”
Ludmila Yamalova
Yes, you are bound by the notice period stated in the offer letter, provided you started working. Here’s why:
- Contract vs. Offer Letter
The offer letter is legally binding if it contains the terms of your employment. Even if you didn’t sign a formal contract, the offer letter is enforceable. - Probation Period
If you’re still within your probation period, either party can terminate without notice. However, if probation has ended, the notice period applies. - Compensation for Early Termination
If you want to leave before serving the full notice period, you may need to compensate your employer. For example, if the notice period is three months, you might owe up to 1.5 months’ salary.
To clarify your obligations, request a copy of any signed agreement or employment record from HR.
Host
A question about gratuity:
“Is end-of-service gratuity after five years calculated as 21 days for all years or 21 days for the first five years and 30 days thereafter?”
Ludmila Yamalova
The gratuity calculation works as follows:
- For the first five years, it’s 21 days of basic salary per year of service.
- After five years, it increases to 30 days of basic salary for each additional year of service.
So, if you’ve completed five years, you’ll receive 21 days for each of those years. Any subsequent years are calculated at 30 days per year.
Host
An employer asks: “We referred an employee to the police for fraud and suspended them. Do we still have to pay their salary while the case is ongoing?”
Ludmila Yamalova
Yes, you are legally obligated to pay their salary. Here’s why:
- Presumption of Innocence
Until a court rules the employee guilty, they remain entitled to their full salary. Suspension alone does not justify withholding pay. - Termination vs. Suspension
Instead of suspension, you can terminate the employee for cause. However, be prepared to pay compensation if they’re later found not guilty. - Practical Advice
Terminate the employee and wait for the case outcome. If they are found guilty, you won’t owe further compensation. If innocent, you may need to pay arbitrary dismissal compensation (up to three months’ salary).
Host
That’s all we have time for today! Thank you, Ludmila, for your expert insights.
Ludmila Yamalova
My pleasure, as always. Looking forward to next week!
Host
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