Companies must be registered and limits placed on amount of commissions, bonuses etc. participants may receive.
Illegal multi-level marketing (MLM) may be subject to fines of VND100 million ($4,400) under new Decree No. 124/2015/ND-CP from the government, supplementing the provisions for administrative sanctions in the trade and manufacture of fake or banned goods to protect the interests of consumers, which took effect on January 5.
Fines from VND30 million ($1,320) to VND50 million ($2,220) will be imposed on businesses conducting MLM without being properly licensed. Fines will double if the violation occurs in more than two central-level cities or provinces.
MLM participants paid commissions, bonuses and other economic benefits in one year that exceed 40 per cent of revenue they create will be fined from VND20 million ($880) to VND30 million ($1,320).
The government previously asked the Ministry of Industry and Trade (MoIT) to work with related ministries and localities to inspect the operations of MLM organizations around the country.
According to the Vietnam Competition Authority under MoIT, the MLM model appeared in Vietnam in the late 1990s. By 2004 there were 20 companies operating in the field. In the early years in Vietnam MLM activities took place absent of any legal framework.
Since being recognized and regulated in 2004, the MLM industry has flourished, with the advent of numerous businesses. As at 2013 there were more than 100 enterprises registered in the field with more than 1 million participants.