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New penalties on multi-level marketing violations

Released at: 12:02, 21/11/2015

New penalties on multi-level marketing violations

Government extends sanctions on improperly registered businesses and those acting improperly in industry.

by Minh Tran

The government has passed amendments to Decree No. 185/2013 on handling violations in commercial activities, with changes in penalties applicable to fraud in multi-level marketing (MLM) activities.

Organizations conducting MLM activities but lacking correct business registration with authorities will be fined VND30 million ($1,300) to VND50 million ($2,200). Fines are doubled if violations take place in two or more cities and provinces under central authority, such as Hanoi, Ho Chi Minh City, Hai Phong, Da Nang, and Can Tho.

MLM participants paying their lowest-level sales force commissions, bonuses, and any other monetary rewards that exceeds 40 per cent of the revenue they brought in during the year will be fined from VND20 million ($890) to VND30 million ($1,300).

Participants in MLM who take advantage of their social standing or power to order other people to join their MLM network or to become involved in any business model that has an MLM form will be fined from VND10 million ($445) to VND20 million ($890).

A fine of VND3 million ($130) to VND5 million ($220) will be imposed on those who require new participants to pay a certain amount in the form of deposit or purchases of a certain amount of products prior to joining.

More details on fraud and respective penalties can be found in the new Decree.

  • TAGS
  • MLM
  • multi-level marketing
  • ponzi
  • pyramid scheme

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