Multi-level marketing is not a violation of the law. However, it is necessary to clearly understand Vietnam’s current regulations on multi-level marketing. From October 15, 2020, there will be heavy penalties for violating the multi-level marketing participation contract.
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Specifically, according to Article 73 of Decree No. 98/2020/ND-CP of Vietnam’s Government prescribing penalties for administrative violations against regulations on commerce, production and trade in counterfeit and prohibited goods, and protection of consumer rights, penalties for violations of multi-level marketing (MLM) participation contracts are specified as follows:
Notably, according to Article 29 of Decree No. 40/2018/ND-CP of Vietnam’s Government providing the regulatory framework for MLM, a MLM contract must meet the following requirements:
A MLM contract must include the following contents:
1. Name, legal representative and contract information of the MLM company;
2. Full name, date of birth, permanent residence (or registered residence of a foreigner), current residence (either permanent or temporary), telephone number, bank account number, number of ID card/ citizen’s identity card/ passport of the participant; number of work permit if the participant is a foreigner;
3. Full name and identity number of the introducer (or sponsor);
4. Information concerning the products sold through the MLM;
5. Information concerning the compensation plan and business rule;
6. Rights and obligations of the parties, which must conform to regulations herein and relevant laws;
7. The provision on payment of commissions and bonuses by bank transfer;
8. The provision on repurchase of products;
9. Cases where a MLM contract is terminated and obligations arising from such termination;
10. The policy for settlement of contract disputes.
A MLM contract must meet the following format requirements:
1. The MLM contract must be made in Vietnamese with a font of at least 12-point size;
2. The text of the MLM contract must have sufficient color contrast against the background.
Moreover, the persons who are not allowed to participate in the MLM network must also be noted.
According to Article 28 of Decree No. 40/2018/ND-CP, a person wishing to participate in the MLM network must have full legal capacity as prescribed by law. The following persons are not allowed to participate in the MLM network:
- A person who is serving a prison sentence or has previous convictions for manufacturing and trading of counterfeit or banned products, false advertising, deceiving consumers, obtaining property by fraud, abuse of trust to appropriate property, illegal impoundment of property or any violations against regulations on MLM;
- A foreigner who fails to possess a valid work permit granted by a competent authority of Vietnam, except for cases of work permit exemption as regulated by the labor law;
- A person who has participated in the MLM and is faced with administrative penalties for committing violations against regulations but the sanctioning duration has not ended;
- The partners, if the MLM company is a partnership, the proprietor, if the MLM company is a private enterprise or a single-member limited liability company, the members, if the MLM company is a limited liability company of two or more members, the founders, if the MLM company is a joint-stock company, or the legal representative of the MLM company must have never held one of the said positions at a MLM company whose MLM registration certificate has been revoked in accordance with regulations of Decree No. 42/2014/ND-CP dated May 14, 2014 of Vietnam’s Government and regulations herein;
- Officials and public employees as regulated in the law on officials and public employees;
Le Vy
- Key word:
- Decree No. 98/2020/ND-CP
