New regulations on penalties for violations of multi-level marketing

The Government has just issued a Decree amending and supplementing a number of articles of Decree No. 185/2013/ND-CP dated November 15, 2013 of the Government regulating administrative sanctions for violations in commercial activities, production and trading of counterfeit and banned goods and protection of consumer rights.

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In particular, the amended Decree penalizes violations of multi-level marketing activities. Specifically, multi-level marketing traders who pay multi-level marketing participants a total value of commissions, bonuses and other economic benefits in a year exceeding 40% of the multi-level marketing enterprise's multi-level marketing revenue in that year will be fined from 20-30 million VND.

A fine of 30-50 million VND shall be imposed on the act of conducting business in the form of multi-level marketing without registering multi-level marketing activities with the competent state agency. A fine of twice the fine for the above-mentioned violation shall be imposed if the violation is committed in two or more provinces or centrally-run cities.

Providing incorrect product information will be fined 1-3 million VND

A fine of between VND 500,000 and VND 1 million shall be imposed on a multi-level marketing participant who commits one of the following violations: Conducting multi-level marketing activities without being granted a membership card as prescribed; failing to present a membership card when introducing goods or marketing sales; failing to provide complete information about the enterprise and multi-level marketing goods of the enterprise as prescribed when sponsoring another person to participate in the multi-level marketing network.

Multi-level marketing participants who provide dishonest or inaccurate information about the goods offered for sale will be fined from 1 to 3 million VND.

Requiring people who want to participate in multi-level marketing to pay a deposit will be fined 3-5 million VND.

A fine of 3-5 million VND shall be imposed on a multi-level marketing participant who requires a person who wants to participate in multi-level marketing to pay a certain amount of money, deposit money or buy a certain quantity of goods in any form to be eligible to participate in the multi-level marketing network.

Multi-level marketing participants who take advantage of their positions, powers, and social status to request others to participate in multi-level marketing networks or purchase multi-level marketing goods will be fined from 10 to 20 million VND. This fine also applies to multi-level marketing traders who do not fully meet the conditions for registering multi-level marketing activities as prescribed by law during their multi-level marketing activities.

According to the Government