Vietnam: Failing to sign written MLM contract shall be fined up to VND 60 million

According to Clause 7 Article 73 of Decree No. 98/2020/NĐ-CP of Vietnam’s Government, a fine ranging from VND 40.000.000 to VND 60.000.000 shall be imposed upon a MLM (multi-level marketing) company for committing one of the following violations:

1. Carrying out MLM activities in a province or central-affiliated city without obtaining a written certification of registration of MLM activities from the Department of Industry and Trade of that province or central-affiliated city;

2. Failing to maintain an authorized representative in a province where no head office, branch or representative office of the MLM company is located;

3. Failing to notify or improperly notifying the Provincial Department of Industry and Trade of a conference, meeting or training program in MLM with the attendance of 30 persons, or more, or with the attendance of 10 participants in the MLM network or more in a province where the registration of MLM activities has been certified as regulated;   

4. Failing to cooperate with competent authorities in monitoring and inspecting conferences, meetings and training programs in MLM organized by the MLM company;

5. Paying a sum of commissions, bonuses and other economic benefits, including benefits from sales promotion programs, to participants during a year in excess of 40% of sales from the MLM activities of the MLM company in the same year;

6. Failing to make payment of commissions, bonuses, promotional amounts and other pecuniary economic benefits to participants by bank transfer;

7. Failing to sign written MLM contract with every participant or signing a MLM contract which does not meet format requirements as prescribed by law;

8. Failing to fulfill or improperly fulfilling the obligation to pay commissions, bonuses and other economic benefits which a participant is entitled to receive during his/her participation in the company's MLM network after terminating the MLM contract signed with that participant;

9. Failing to provide or improperly providing basic training programs to participants in the MLM network or collecting fees when providing such training programs; 

10. Failing to issue or issuing membership cards to participants in the MLM network against regulations or collecting fees when issuing membership cards; 

11. Appointing unqualified trainers to provide basic training programs for participants in the company’s MLM network;

12. Failing to strictly comply with the registered business rules or compensation plan;

13. Failing to issue invoice for each supply of products to participants in the MLM network or clients who buy products directly from the MLM company;

14. Failing to operate the information technology system for managing participants in the MLM network as prescribed;

15. Failing to operate or regularly update the MLM company’s website in Vietnamese version in order to publish information concerning the company’s profiles and MLM status as prescribed;

16. Failing to operate a communications system to receive and settle complaints and queries of MLM participants, including telephone, email and contact address;

17. Failing to provide the right to access the MLM company’s information technology system for managing participants at the written request of MLM authorities;

18. Failing to delivery or delivering products against regulations.

View more details at the Decree No. 98/2020/NĐ-CP of Vietnam’s Government, effective from October 15, 2020.

Le Vy

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