Responsibility of organizations and individuals that perform multi-level marketing in Vietnam as of July 1, 2024

Responsibility of organizations and individuals that perform multi-level marketing in Vietnam as of July 1, 2024 (Internet image)

What is multi-level marketing under the law in Vietnam?

According to point b, clause 7, Article 3 of the Law on Protection of Consumers’ Rights 2023 stipulating multi-level marketing:

Multi-level marketing (hereinafter referred to as “MLM”), which involves selling goods through a network of participants at different levels wherein commissions, bonuses and other economic benefits are or may be paid to participants based on their personal sales and the sales made by other distributors below the participants;

Thus, unlike multi-level organizations that disguise themselves as scams, the official form of multi-level marketing is recognized and regulated by law as above.

Responsibility of organizations and individuals that perform MLM in Vietnam

Pursuant to Article 25 of Decree 55/2024/ND-CP​:

- Multi-level marketing (MLM) organizations shall:

+ Comply with regulations on the conclusion of written MLM contracts and assignment of contracts to MLM salespersons according to the regulations on operational principles;       

+ Comply with the regulations on the provision of basic training for MLM salespersons according to the regulations on operational principles within 30 days after concluding MLM contracts;

+ Comply with the responsibilities for maintaining the revenue ratio from selling goods to consumers who are not MLM salespersons according to the regulations of operational principles, compensation plans, and the law.

+ The revenue prescribed in this Point is the revenue generated from when salespersons make sales to consumers or when MLM enterprises make sales to consumers through introduction codes of participants;

+ Carry out other responsibilities according to the law on the management of MLM business activities and relevant laws.

- MLM individuals shall:  

+ Store MLM contracts according to the regulations on operational principles;

+ Participate in basic training programs according to the regulations on operational principles within 30 days after concluding MLM contracts;  

+ Carry out other responsibilities according to the law on the management of MLM business activities and relevant laws.

- An MLM participant shall:

+ Present his/her membership card before introducing or selling goods;

+ Comply with terms and conditions of the MLM contract and the MLM company’s business rule;

+ Not abuse his/her position, power or social position to encourage, request, lure or entice other persons to participate in MLM network or buy goods through the MLM model.

MLM contracts

- An MLM organization and an MLM participant must enter into a written MLM contract.

- An MLM contract must satisfy the conditions concerning language and form under regulations of this Law and law on MLM management.

(Article 46 of the Law on Protection of Consumers’ Rights 2023)

Organization and individuals that perform MLM are prohibited from performing any of the following acts:

- Requesting a prospective participant to deposit or pay a certain amount of money or purchase a certain quantity of goods in any way to be eligible to enter into an MLM contract;

- Providing false or misleading information to consumers and individuals participating in MLM.

- Operating the MLM network without obtaining the MLM registration certificate; introducing the MLM network before obtaining the MLM registration certificate;

- Operating the MLM network with respect to services or other forms other than purchase or sale of goods, unless otherwise provided for by law;

- Developing the MLM network without actual goods sale and purchase transactions

- Engaging in any of the acts specified in clause 1 of Article 10 of the Law on Protection of Consumers’ Rights 2023.

(Clause 2, Article 10 of the Law on Protection of Consumers’ Rights 2023)

More details can be found in the Law on Protection of Consumers’ Rights 2023, which comes into force from July 1, 2024.

Le Nguyen Anh Hao

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