Summary of penalties for violation against regulation on multi-level marketing in Vietnam

Violations

Fines

Additional penalties/ Remedial measures

Note

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

VND 3.000.000 to VND 5.000.000 

None

None

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

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

VND 5.000.000 to VND 10.000.000

None

None

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.

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;

 VND 10.000.000 to VND 20.000.000

The violating entity is compelled to return any benefits illegally obtained from the commission of the admistrative violations

None

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;

The violating entity is compelled to correct false or misleading information

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

None

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.

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

VND 20.000.000 to VND 30.000.000

None

None

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

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,

VND 30.000.000 to VND 50.000.000

The violating entity is compelled to return any benefits illegally obtained from the commission of the admistrative violations

A fine that is twice as much as the corresponding fine shall be imposed if the violation involves two provinces or central-affiliated cities or more.

Failing to carry out or improperly carrying out procedures for modification of the MLM registration certificate as prescribed by law;

VND 30.000.000 to VND 40.000.000

None

None

Failing to carry out or improperly carrying out procedures for notification of changes in the list of products sold through the MLM network as prescribed by law;

Failing to carry out procedures for re-issuance of the MLM registration certificate in cases prescribed by law; 

Signing MLM contracts with individuals who fail to fulfill eligibility requirements for participants in the MLM as prescribed by law;

Signing a MLM contract which does not contain adequate primary contents as prescribed by law;

Failing to terminate the MLM contract signed with the participant who is penalized for committing prohibited acts in the MLM sector;

Failing to implement or improperly implementing the regulation that the MLM company must make and publish the list of trainers on its website, submit the one to the Ministry of Industry and Trade, and keep relevant documents;  

Failing to implement or improperly implementing the regulation that the MLM company must update the list of trainers on its website and send the updated list of trainers to the Ministry of Industry and Trade upon occurrence of any changes in that list;

Failing to implement or improperly implementing regulations on publishing of documents concerning the MLM company’s operation and products at its head office, branches, representative offices and business locations;

Failing to set up and announce the prices of products sold through the MLM model or failing to sell products at the announced prices;

 Failing to supervise participants in its MLM network so as to ensure that they strictly comply with the signed MLM contracts, the company's business rules and compensation plan;

Failing to implement or improperly implementing regulations on registration of modification of or supplements to registered MLM activities carried out in a province with the Provincial Department of Industry and Trade in cases prescribed by law;

Failing to give a written notification to the Provincial Department of Industry and Trade of failure to organize the conference, meeting or training course which has been notified to the Provincial Department of Industry and Trade;

Failing to carry out procedures for modification of the written deposit confirmation with the bank upon occurrence of changes in confirmed deposit contents;

Failing to comply with the prescribed time limit for completing procedures for renewal of a MLM registration certificate;

Failing to promptly report the failure of the information technology system used for managing participants in the MLM network to the authority issuing the MLM registration certificate;

Failing to implement or improperly implementing regulations on retention and submission of documents concerning the MLM activities carried out in a province at the request of competent authorities;

Failing to implement or improperly implementing regulations on reporting on MLM activities.

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;

VND 40.000.000 to VND 60.000.000

None

None

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

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;   

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

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;

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

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

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;

The violating entity is compelled to return any benefits illegally obtained from the commission of the admistrative violations

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

The violating entity is compelled to return any benefits illegally obtained from the commission of the admistrative violations

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

The violating entity is compelled to return any benefits illegally obtained from the commission of the admistrative violations

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

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

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;

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

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;

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

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

 Failing to delivery or delivering products against regulations.

Maintaining more than a MLM contract, position, identity number or another form of equivalent validity for a participant;

VND 60.000.000 to VND 80.000.000

. None

A fine that is twice as much as the corresponding fine shall be imposed if the violation involves two provinces or central-affiliated cities or more.

Implementing sales promotion program using a multi-level network in which a participant has more than a position, identity number or another form of equivalent validity;

None

Providing commercial intermediary services as regulated in the Law on commerce with the aims of maintaining, expanding and developing its own MLM network;

Receiving or accepting a participant's application or another document which states that the participant relinquishes a part or all of his/her rights as prescribed by law or says that the MLM company must not fulfill obligations towards the participant as prescribed by law;

Failing to use the management system registered with the authority issuing the MLM registration certificate to manage its MLM participants;

Trading or transferring the network of MLM participants to another enterprise, except for acquisition, consolidation or merger of enterprises

The violating entity is compelled to return any benefits illegally obtained from the commission of the admistrative 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;

VND 80.000.000 to VND 100.000.000

The violating entity is compelled to return any benefits illegally obtained from the commission of the admistrative violations

A fine that is twice as much as the corresponding fine shall be imposed if the violation involves two provinces or central-affiliated cities or more.

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;

The violating entity is compelled to return any benefits illegally obtained from the commission of the admistrative violations

None

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;

None

Refusing to pay, without legitimate reasons, commissions, bonuses or other economic benefits to eligible participants;

The violating entity is compelled to return any benefits illegally obtained from the commission of the admistrative violations

Providing false information concerning the compensation plan or benefits obtained from the participation in the MLM network;

The violating entity is compelled to correct false or misleading information

 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;

The violating entity is compelled to correct false or misleading information

Failing to repurchase products or repurchasing products against regulations;

None

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;

The violating entity is compelled to return any benefits illegally obtained from the commission of the admistrative violations

Using the MLM strategy to trade or sell subjects other than the permitted ones. 

The violating entity is compelled to return any benefits illegally obtained from the commission of the admistrative violations