Multi-level marketing schemes in disguise - a form of pickpocketing.

(Baonghean) - Nearly 2 trillion VND was embezzled, and over 64,000 people became victims in a scam that ranks among the most "classic" examples of so-called multi-level marketing.

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The entire country was shocked when this information was released. A series of questions were raised for the authorities. Indeed, the story of the two "successful businessmen," one of whom impersonated a colonel in the army and worked for Lien Ket Viet Company, being arrested, along with the immediate collapse of an entire network spanning 27 provinces and cities (including Nghe An), has become one of the most talked-about topics in the media recently.

All the information surrounding this story seems to have been dissected from various angles such as legal sanctions, social management, business ethics, etc. However, from an economic perspective, we would like to discuss a few more points with the hope of approaching the issue comprehensively and objectively. On that basis, we aim to help limit avoidable mistakes, further identify, and ultimately reduce distortions in our country's market economy.

Multi-level marketing (MLM) is a product of the modern market. Its origin, purpose, and function ultimately boil down to a form of product distribution—in simpler terms, a sales method. First, it's necessary to clearly define the difference between MLM and fraud. The nature of MLM is not fraud. MLM is a business model that has been present in our country for over a decade; it is recognized and protected by law. The promulgation of the 2004 Competition Law, Government Decree 110/2005/ND-CP dated August 24, 2005, on the management of multi-level marketing activities, and Circular No. 19/2005/TT-BTM of the Ministry of Trade dated November 8, 2005, guiding some contents of Decree 110/2005/ND-CP on multi-level marketing business, have affirmed the Vietnamese government's attitude of recognizing the legality of multi-level marketing activities. It must be said that the law has fundamentally created a legal foundation for the relationship between multi-level marketing businesses and participants through multi-level marketing participation contracts.

Multi-level marketing (MLM) contributes to market expansion, bringing quality products to consumers at a reasonable intermediary cost. The wholesale price of products to those within the system is theoretically no higher than the retail price of similar products in the open market. However, in our country, this type of business is being exploited and distorted in an extremely serious, systematic, and widespread manner, causing economic damage and affecting consumer rights. Now, it seems that few people believe in MLM anymore. People either avoid it or rush into it with the goal of making quick money, only to become both victims and perpetrators of this exploitative business practice. Limited knowledge, excessive naivety, and an inability to control greed have led many to financial ruin on the virtual money they recklessly pursued.

Invest 8 million, and after four years you'll have 500 million! That's the information emanating from the heart of the multi-level marketing storm. How many people believe that? Certainly some, but probably not many! Greed and despair in life prevented them from continuing, or are there other reasons? The full answer awaits the responsible authorities. There have been suggestions to completely ban this type of business. However, banning something because it's unmanageable is never the right solution.

It is known that currently, over 1 million people nationwide are participating in various multi-level marketing (MLM) networks. So, how many of them are victims of fraud, and how many more potential customers will join this formidable "business" army? In reality, the tactics of Lien Ket Viet, as seen recently, are not particularly sophisticated. It's still just impersonating officials, forging Prime Minister's commendations, borrowing a few famous people to attend seminars to show off, promising high commissions to attract customers… that's all, yet they've been operating for a whole year. It's time to review and rectify the situation. Government Decree 110/2005/ND-CP and Circular No. 19/2005/TT-BTM of the Ministry of Trade (on multi-level marketing) are already over 10 years old. A strict attitude is needed towards these "pocket-picking" MLM schemes. I don't think a healthy society or a positively developing economy will thrive if workers are increasingly becoming… multi-level marketing scams.

Nguyen Khac An