The form of multi-level marketing always creates many problems and potential risks that are dangerous to society. Therefore, the law of Vietnam has been perfecting regulations to guide this activity in the right direction. In particular, sanctions are set out to strictly handle violators, including multi-level marketing enterprises.
Article table of contents
Specifically, according to Clause 9 Article 73 of the Decree No. 98/2020/NĐ-CP of Vietnam’s Government, a fine ranging from VND 80.000.000 to VND 100.000.000 shall be imposed upon a MLM (multi-level marketing) company for committing one of the following violations:
- Requesting a prospective participant to deposit or pay a certain amount of money in any way to be eligible to enter into a MLM contract;
- Requesting a prospective participant to buy a certain quantity of products in any way to be eligible to enter into a multi-level marketing contract;
- Paying money or other economic benefits to a participant in compensation for his/her recruitment of new distributors without consideration of his/her sale of products to recruited distributors;
- Refusing to pay, without legitimate reasons, commissions, bonuses or other economic benefits to eligible participants;
- Providing false information concerning the compensation plan or benefits obtained from the participation in the MLM network;
- Providing false or misleading information about features or uses of products or operations of the MLM company through speakers or trainers at conferences, meetings, training courses or training materials of the MLM company;
- Failing to repurchase products or repurchasing products against regulations;
- Operating the MLM network without obtaining the MLM registration certificate or against the contents of 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;
- Using the MLM strategy to trade or sell subjects other than the permitted ones.
The fine that is twice as much as the corresponding fine prescribed above shall be imposed if the violation involves two provinces or central-affiliated cities or more, which shall be up to VND 200 million.
Moreover, the violating entity is compelled to take remedial measures as follows:
- Compelled to return any benefits illegally obtained from the commission of the violation;
- Compelled to correct false or misleading information.
The application or not of a sanction for forcing the implementation of remedial measures depends on the form of violation, based on the provisions of Clause 11 Article 73 of Decree No. 98/2020/NĐ-CP of Vietnam’s Government.
Thuy Tram
