THE GOVERNMENT
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THE SOCIALIST
REPUBLIC OF VIETNAM
Independence – Freedom – Happiness
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No.:
141/2018/ND-CP
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Hanoi, October
08, 2018
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DECREE
AMENDING
AND SUPPLEMENTING A NUMBER OF ARTICLES OF DECREES PRESCRIBING PENALTIES FOR
VIOLATIONS AGAINTS REGULATIONS ON MULTI-LEVEL MARKETING
Pursuant to the Law on government organization
dated June 19, 2015;
Pursuant to the Competition Law dated December
03, 2004;
Pursuant to the Law on penalties for administrative
violations dated June 20, 2012;
At the request of the Minister of Industry and
Trade;
The Government promulgates a Decree amending and
supplementing a number of articles of Decrees prescribing penalties for
violations against regulations on multi-level marketing (hereinafter referred
to as “MLM”).
Article 1. Amendments to a
number of articles of the Government’s Decree No. 71/2014/ND-CP dated July 21,
2014 on elaboration of the Competition Law regarding penalties for violations
against the Competition Law (hereinafter referred to as " Decree No.
71/2014/ND-CP”) and the Government’s Decree No. 185/2013/ND-CP dated November
15, 2013 introducing penalties for administrative violations against
regulations on commercial activities, production and trade of counterfeit and
banned goods, and protection of consumer rights as amended and supplemented in
the Government’s Decree No. 124/2015/ND-CP dated November 19, 2015 (hereinafter
referred to as “Decree No. 185/2013/ND-CP”)
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“Article 36. Illegal acts in multi-level
marketing
1. A fine ranging from VND 80,000,000 to VND
100,000,000 shall be imposed for one of the following violations:
a) Requesting a prospective participant to deposit or
pay a certain amount of money in any way to be eligible to enter into a MLM
contract;
b) Requesting a prospective participant to buy a
certain quantity of products in any way to be eligible to enter into a MLM
contract;
c) Paying money or other economic benefits to a
participant in compensation for his/her recruitment of new distributors without
consideration of his/her sale of products to recruited distributors;
d) Refusing to pay, without giving legitimate
reasons, commissions, bonuses or other economic benefits to eligible
participants;
dd) Providing false information concerning the
compensation plan or benefits obtained from the participation in the MLM;
e) Providing false or misleading information about
features or uses of products or operations of the MLM company through speakers
or trainers at conferences, meetings, training courses or training materials of
the MLM company;
g) Failing to fulfill or improperly fulfilling
duties to repurchase products in accordance with laws.
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3. Besides the fines prescribed in Clause 1 and
Clause 2 of this Article, the organization that commits administrative
violations may be liable to one or several remedial measures mentioned below:
a) Enforced correction of information if the
violation prescribed in Point dd or Point e Clause 1 of this Article is committed;
b) Enforced confiscation of exhibits and
instrumentalities of violations against the Competition Law, including illegal
profits earned from such violations if one of the violations prescribed in
Clause 1 of this Article is committed.
4. When imposing penalties, the person authorized
to impose penalties for violations prescribed in Clause 9 of this Article shall
also request the authority issuing the MLM registration certificate to consider
revoking the MLM registration certificate of the violating entity in accordance
with laws.”
2. Article 92 of the Decree No.
185/2013/ND-CP is amended as follows:
“Article 92. Violations against regulations on
multi-level marketing
1. A fine ranging from VND 3,000,000 to VND
5,000,000 shall be imposed upon a participant in the MLM for one of the
following violations:
a) Carrying out marketing, sale and recruitment of
downline distributors before obtaining a membership card;
b) Failing to present the membership card before
introducing or selling products.
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a) Failing to comply with terms and conditions of
the signed MLM contract and the MLM company’s business rules;
b) Failing to satisfy eligibility requirements to
be fulfilled by a participant in the MLM as regulated.
3. A fine ranging from VND 10,000,000 to VND
15,000,000 shall be imposed upon a participant for performing MLM activities in
a province in which the MLM company does not yet go through formalities for
registration of its MLM activities.
4. A fine ranging from VND 15,000,000 to VND
20,000,000 shall be imposed upon a participant in the MLM for one of the
following violations:
a) Request a prospective participant to deposit or
pay a certain amount of money in any way to be eligible to enter into a MLM
contract;
b) Providing false or misleading information about
the compensation plan, business rules, benefits of a participant, features or
uses of products, or operations of the MLM company;
c) Organizing MLM conferences, meetings or training
courses without obtaining a written authorization from the MLM company;
d) Luring, enticing or bribing participants of
another MLM company to participate the network of the MLM company of which
he/she is a participant;
dd) Taking advantage of his/her position, powers or
social position to encourage, request, lure or entice other persons to
participate in the MLM network or buy products sold through the MLM model.
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6. A fine ranging from VND 30,000,000 to VND 40,000,000
shall be imposed upon an individual for organizing conferences, meetings,
training courses or introduction of his/her MLM network or the MLM network of
another organization or individual without obtaining the MLM registration
certificate.
7. A fine ranging from VND 40,000,000 to VND
50,000,000 shall be imposed upon an individual for operating the MLM network
without obtaining the MLM registration certificate as regulated if illegal
profit earned from his/her MLM operation is not exceeding VND 200,000,000 or
this violation causes damage estimated at less than VND 500,000,000 to other
persons.
8. A fine ranging from VND 25,000,000 to VND
30,000,000 shall be imposed upon a trader for committing one of the following
violations:
a) Failing to carry out or improperly carrying out
procedures for modification of the MLM registration certificate as regulated by
laws;
b) Failing to carry out or improperly carrying out
procedures for notification of changes in the list of products sold through the
MLM network as regulated by laws;
c) Failing to carry out procedures for re-issuance
of the MLM registration certificate in prescribed cases;
d) Signing MLM contract with an individual who
fails to satisfy eligibility requirements to be fulfilled by a participant as
regulated by laws;
dd) Signing a MLM contract which does not include
basic contents as regulated by laws;
e) Failing to terminate the MLM contract when the
participant must face penalties for any prohibited acts in the MLM sector;
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h) Failing to comply with or improperly implementing
the regulation that the MLM company must update the list of trainers on its
website and send the updated list of trainers to the Ministry of Industry and
Trade upon the occurrence of any changes in the list of trainers;
i) Failing to comply with or improperly
implementing regulations on publishing of documents concerning the MLM
company’s operation and products at its head office, branches, representative
offices and business locations;
k) Failing to set up and publish the prices of
products sold through the MLM model or failing to sell products at the
announced prices;
l) Failing to supervise participants in its MLM
network so as to ensure that they strictly comply with the signed MLM
contracts, the company's business rules and compensation plan;
m) Failing to comply with or improperly
implementing regulations on registration of modification of or supplements to
registered MLM activities carried out in a province with the Provincial
Department of Industry and Trade in prescribed cases;
n) Failing to give a written notification to the
Provincial Department of Industry and Trade of failure to organize the
conference, meeting or training course which has been notified to the
Provincial Department of Industry and Trade as regulated;
o) Failing to carry out procedures for modification
of the written deposit confirmation with the bank in case there are changes in
confirmed deposit contents;
p) Failing to comply with regulations on time limit
for completing procedures for renewal of the MLM registration certificate;
q) Failing to promptly report on the failure in the
information technology system employed to manage participants in the MLM
network to the authority issuing the MLM registration certificate.
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a) Carrying out MLM activities in a province or
central-affiliated city without obtaining a written certification of registration
of MLM activities from the Department of Industry and Trade of that province or
central-affiliated city;
b) Failing to maintain an authorized representative
in a province where no head office, branch or representative office of the
trader is located;
c) Failing to comply with or improperly
implementing the regulation on retention and submission of documents concerning
the MLM activities carried out in a province at the request of a competent
authority;
d) Failing to comply with or improperly implementing
the regulation on giving notification to the Provincial Department of Industry
and Trade when organizing a conference, meeting or training program in MLM with
the attendance of 30 persons, or 10 participants in the MLM network, or more,
in a province where the registration of MLM activities has been certified as
regulated;
dd) Failing to cooperate with relevant competent
authorities in monitoring and supervising conferences, meetings and/or training
programs in MLM organized by the MLM company;
e) Paying a sum of commissions, bonuses and other
economic benefits, including benefits earned from promotion programs, to
participants during a year in excess of 40% of sales from the MLM activities of
the MLM company in the same year;
g) Failing to make payment of commissions, bonuses
and other pecuniary economic benefits to participants by bank transfer;
h) Failing to comply with or improperly
implementing the regulation on reporting on MLM activities;
i) Failing to enter into a written MLM contract with
every participant or signing a MLM contract which does not meet format
requirements as regulated by laws;
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l) Failing to provide or providing the basic
training program to participants in the MLM network in an improper manner or
collecting fees when providing such basic training program;
m) Failing to issue or issuing membership cards to
participants in the MLM network in an improper manner or collecting fees when
issuing a membership card;
n) Appointing unqualified trainers to provide basic
training programs for participants in the company’s MLM network;
o) Failing to strictly comply with the registered
business rules or compensation plan;
p) Failing to issue invoice for each supply of
products to participants in the MLM network or clients who buy products
directly from the MLM company;
q) Failing to operate the information technology
system for managing participants in the MLM network as regulated;
r) Failing to operate or regularly update the MLM
company’s website in Vietnamese version in order to publish information
concerning the company’s profiles and MLM status as regulated;
s) Failing to operate a communications system to
receive and take actions against complaints and queries of MLM participants,
including telephone, email and contact address;
t) Failing to provide the right to access to the
MLM company’s information technology system for managing participants at the
written request of a MLM authority;
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uu) Failing to comply with or improperly
implementing the regulation on delivery of products.
10. A fine ranging from VND 40,000,000 to VND
50,000,000 shall be imposed upon a trader for committing one of the following
violations:
a) Maintaining more than a MLM contract, position,
identity number or another of equivalent validity for a participant;
b) Implementing sales promotion program using
multi-level network in which a participant has more than a position, identity
number or another of equivalent validity;
c) Providing commercial intermediary services as
regulated by the Law on commerce with the aims of maintaining, expanding and
developing its own MLM network;
d) Receiving or accepting a participant's
application or another document which states that the participant relinquishes
a part or all of his/her rights as regulated by laws or says that the MLM
company must not fulfill obligations towards to the participant as regulated by
lawsoft;
dd) Failing to use the management system registered
with the authority issuing the MLM registration certificate to manage its MLM
participants;
e) Trading or transferring the network of MLM
participants to another enterprise, except for acquisition, amalgamation or
merger of enterprises;
g) Operating the MLM network without obtaining the
MLM registration certificate if illegal profit earned from this violation is
not exceeding VND 200,000,000 or this violation causes damage estimated at less
than VND 500,000,000 to other persons;
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11. A fine twice as much as the fine prescribed in Clause
10 of this Article shall be imposed upon a trader for committing one of
corresponding violations prescribed in Clause 10 of this Article if that
violation is found to involve two provinces or central-affiliated cities or
more.
12. Remedial measures:
a) Enforced transfer of illegal benefits obtained
from the administrative violation prescribed in Point a Clause 4, Point k,
Point l or Point m Clause 9, Point e, Point g or Point h Clause 10 of this
Article;
b) Enforced correction of information if the violation
prescribed in Point b Clause 4 of this Article is committed.
13. When imposing penalties, the person authorized
to impose penalties for violations prescribed in Clause 9 of this Article shall
also request the authority issuing the MLM registration certificate to consider
revoking the MLM registration certificate of the violating entity in accordance
with laws.”
Article 2. Entry into force
1. This Decree comes into force as from November
25, 2018.
2. Application of regulations hereof to violations
committed before the date of entry into force of this Decree:
If this Decree does not contain legal liability or
impose a less serious legal liability on a violation which is committed before
the date of entry into force of this Decree but is detected afterwards or is
under consideration, regulations hereof shall apply.
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Ministers, heads of ministerial-level agencies,
heads of Government’s affiliates, Chairpersons of people’s committees of
provinces and central-affiliated cities, and relevant organizations and
individuals shall implement this Decree./.
ON BEHALF OF
THE GOVERNMENT
PRIME MINISTER
Nguyen Xuan Phuc