Vietnam: Severe fine for organizing meetings in or introduction of the MLM network before obtaining the MLM registration certificate

According to Article 73 of Decree No. 98/2020/NĐ-CP of Vietnam’s Government, penalties for violations against regulations on multi-level marketing (MLM) are as follows:

1. A fine ranging from VND 3.000.000 to VND 5.000.000 shall be imposed upon a participant in the MLM for committing one of the following violations:

- Carrying out marketing, sale and recruitment of downline distributors before obtaining a membership card;

- Failing to present the membership card before introducing or selling products.

2. A fine ranging from VND 5.000.000 to VND 10.000.000 shall be imposed upon a participant in the MLM for committing one of the following violations:

- Failing to comply with terms and conditions of the signed MLM contract and the MLM company’s business rules;

- Participating in the MLM without fulfilling eligibility requirements;

- Performing MLM activities in a province in which the MLM company is not yet granted certificate of registration of MLM activities.

3. A fine ranging from VND 10.000.000 to VND 20.000.000 shall be imposed upon a participant in the MLM for committing one of the following violations:

- 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 a MLM contract;

- Providing false or misleading information about the compensation plan, business rules, benefits of a participant, features or uses of products, or operations of the MLM company;

- Organizing MLM conferences, meetings or training courses without obtaining a written authorization from the MLM company;

- Luring, enticing or bribing participants of another MLM company to participate in the network of the MLM company of which he/she is a participant;

- Taking advantage of his/her position, powers or social position to encourage, request, lure or entice other persons to participate in the MLM network or buy products sold through the MLM model.

4. A fine ranging from VND 20.000.000 to VND 30.000.000 shall be imposed for committing one of the following violations:

- Participating in the MLM network of an entity that is not yet granted the MLM registration certificate;

- Organizing conferences, meetings, training courses in or introduction of the MLM network before obtaining the MLM registration certificate.

5. A fine ranging from VND 30.000.000 to VND 50.000.000 shall be imposed for operating the MLM network without obtaining the MLM registration certificate if obtaining illegal profit less than VND 200.000.000 or causing damage estimated at less than VND 500.000.000 to others, except the case prescribed in Point h Clause 9 of this Article.

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View more details at the Decree No. 98/2020/NĐ-CP of Vietnam’s Government, issued on August 24, 2020.

Le Vy

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