Maximum increase of 10 times the penalty for violations of multi-level marketing

The Government has just issued Decree No. 141/2018/ND-CP amending and supplementing a number of articles of the decrees regulating the handling of violations of the law in multi-level marketing activities. Decree 141 takes effect from November 25, 2018 with many new points including increasing the level of penalties for violations in the field of multi-level marketing, with some violations being fined up to 10 times.

Specifically, for illegal multi-level marketing activities, Decree 141 stipulates a fine of 80 to 100 million VND if other people are required to deposit, pay money or buy a quantity of goods to sign a contract to participate in multi-level marketing.

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Next include acts of allowing multi-level marketing participants to receive money or other economic benefits from introducing people to multi-level marketing activities; refusing to pay commissions and bonuses; not performing or improperly performing obligations to buy back goods...

The fine will double (from 160 to 200 million VND) if the above acts are committed in 2 or more provinces or centrally-run cities.

Regarding the group of violations in multi-level marketing activities, Decree 141 stipulates a fine of 3 to 5 million VND for those participating in multi-level marketing if they violate marketing, sales and development activities of multi-level marketing networks, or fail to present membership cards... (old fines range from 300 to 500 thousand VND).

Next, multi-level marketing sellers can be fined from 15 to 20 million VND if they require others to pay money to sign a contract; provide false information about the reward plan, benefits of participating in multi-level marketing or features and uses of goods, etc.

Traders can be fined from 25 to 30 million VND if they sign a multi-level sales contract with an unqualified individual or sign an incomplete contract; do not terminate the contract with a multi-level seller when this person is penalized; do not build and announce the selling price of goods traded under the multi-level method...

Next, a fine of 30 to 40 million VND will be imposed on traders who pay multi-level sellers a total value of commissions, bonuses and other economic benefits exceeding 40% of the enterprise's revenue in that year; do not properly implement the operating rules and registered bonus payment plans; organize conferences, seminars, training courses and introductions to unlicensed multi-level marketing business activities.

Traders can also be fined from 40 to 50 million VND for the act of buying, selling or transferring a network of multi-level sales participants to another enterprise (except in cases of buying, merging or consolidating enterprises); doing multi-level business with unauthorized subjects...