Decree No. 141/2018/ND-CP amending and supplementing some articles of decrees on handling violations of law in direct selling activities.

DECREE

AMENDING AND SUPPLEMENTING CERTAIN PROVISIONS OF DECREE REGULATING VIOLATIONS OF LAW IN MULTILEVEL MARKETING ACTIVITIES

On the basis ofLaw on Government Organization June 19, 2015;

Pursuant toCompetition LawDecember 3, 2004;

Pursuant toLaw on Administrative Violation Handlingdated December 9, 2020;

At the proposal of the Minister of Industry and Trade;

The Government promulgates this Decree to amend and supplement certain provisions of Decrees regulating violations of law in multilevel marketing activities.

 

Article 1. Amending certain provisions ofDecree No. 71/2014/NĐ-CPJuly 21, 2014, of the Government detailing the Competition Law on handling violations of law in competition (hereinafter referred to as Decree No. 71/2014/NĐ-CP) andDecree No. 185/2013/NĐ-CPNovember 15, 2013, of the Government on administrative penalties for violations in trade activities, production, sale of counterfeit goods, banned goods, and consumer protection which have been amended and supplemented byDecree No. 124/2015/NĐ-CPNovember 19, 2015, of the Government amending and supplementing certain provisions of Decree No. 185/2013/NĐ-CP dated November 15, 2013, of the Government on administrative penalties for violations in trade activities, production, sale of counterfeit goods, banned goods, and consumer protection (hereinafter referred to as Decree No. 185/2013/NĐ-CP)

1. Clause 36 of Decree No. 71/2014/NĐ-CP shall be amended as follows:

"Article 36. Unfair Multilevel Marketing Activities

1. A fine of VND 80,000,000 to VND 100,000,000 shall be imposed on organizations that commit any of the following violations:

a) Requiring others to deposit or pay a certain amount of money to enter into a contract to participate in multilevel marketing activities;

b) Requiring others to purchase a certain quantity of goods to enter into a contract to participate in multilevel marketing activities;

c) Allowing participants in multilevel marketing activities to receive money or other economic benefits from introducing others to join the multilevel marketing network without such benefits arising from the purchase or sale of goods from those introduced;

d) Refusing to pay commissions, bonuses, or other economic benefits without justifiable reasons to which participants in multilevel marketing activities are entitled;

đ) Providing false information about reward plans or the benefits of joining the multilevel marketing network;

e) Providing false or misleading information about the features or functions of goods or the operations of the enterprise through sales representatives, trainers at meetings, seminars, training sessions, or through enterprise materials;

g) Failing to fulfill or fulfilling incorrectly the obligation to repurchase goods as prescribed by law.

2. A fine twice the amount specified in Clause 1 of this Article shall be imposed on organizations committing violations under Clause 1 of this Article if such violations are committed in two or more provinces or centrally-administered cities.

3. In addition to the fines stipulated in Clauses 1 and 2 of this Article, organizations committing violations may also be subject to one or several additional forms of administrative penalties and measures to remedy the consequences as follows:

a) Compelling public correction for violations under points đ and e of Clause 1 of this Article;

b) Confiscating objects and means used to violate competition laws, including confiscating profits derived from the implementation of the violation, for violations under Clause 1 of this Article.

4. Authorities responsible for imposing penalties for violations under Clause 9 of this Article shall notify the agency issuing the registration certificate for multilevel marketing activities to consider applying measures to revoke the registration certificate for multilevel marketing activities according to the law."

2. Clause 92 of Decree No. 185/2013/NĐ-CP shall be amended as follows:

"Article 92. Violations in Multilevel Marketing Activities

1. A fine of VND 3,000,000 to VND 5,000,000 shall be imposed on participants in multilevel marketing activities who commit any of the following violations:

a) Engaging in marketing, selling, and developing a multilevel marketing network before obtaining a Member Card;

b) Failing to present the Member Card before introducing or marketing products.

2. A fine of VND 5,000,000 to VND 10,000,000 shall be imposed on participants in multilevel marketing activities who commit any of the following violations:

a) Failing to comply with the multilevel marketing participation contract and the enterprise's operational rules;

b) Participating in multilevel marketing activities without meeting the conditions for participating in multilevel marketing activities as prescribed.

3. A fine of VND 10,000,000 to VND 15,000,000 shall be imposed on participants in multilevel marketing activities who engage in multilevel marketing activities in areas where the enterprise has not obtained registration confirmation for multilevel marketing activities.

4. A fine of VND 15,000,000 to VND 20,000,000 shall be imposed on participants in multilevel marketing activities who commit any of the following violations:

a) Requiring others to deposit or pay a certain amount of money to enter into a contract to participate in multilevel marketing activities;

b) Providing false or misleading information about reward plans, operational rules, benefits of joining multilevel marketing activities, features or functions of goods, or the operations of multilevel marketing enterprises;

c) Organizing meetings, seminars, or training sessions on multilevel marketing activities without written authorization from the multilevel marketing enterprise;

d) Luring, enticing, or bribing participants in multilevel marketing activities from other enterprises to join their own multilevel marketing network;

đ) Taking advantage of positions, powers, social status, or professions to encourage, require, lure, or entice others to join a multilevel marketing network or purchase goods for multilevel marketing activities.

5. A fine of VND 20,000,000 to VND 25,000,000 shall be imposed on individuals participating in the activities of organizations or individuals engaged in multilevel marketing activities without obtaining a registration certificate for multilevel marketing activities.

6. A fine of VND 30,000,000 to VND 40,000,000 shall be imposed on individuals organizing meetings, seminars, training sessions, or introductions about their own or another organization's multilevel marketing activities without obtaining a registration certificate for multilevel marketing activities.

7. A fine of from VND 40,000,000 to VND 50,000,000 shall be imposed on an individual conducting multi-level marketing activities without having obtained a certificate of registration for multi-level marketing operations and earning unlawful profits under VND 200,000,000 or causing losses to others under VND 500,000,000.

8. A fine of from VND 25,000,000 to VND 30,000,000 shall be imposed on a trader committing any of the following violations:

a) Not implementing or improperly implementing procedures to request amendments or supplements to the certificate of registration for multi-level marketing operations as prescribed by law;

b) Not implementing or improperly implementing notification procedures in cases of changes to information in the list of goods sold through multi-level marketing methods as prescribed by law;

c) Not implementing procedures to request issuance of a new certificate of registration for multi-level marketing operations when required by law;

d) Entering into a multi-level marketing participation contract with an individual who does not meet the conditions for participating in multi-level marketing as prescribed by law;

đ) Entering into a multi-level marketing participation contract that does not include all essential contents as prescribed by law;

e) Not terminating a contract with a multi-level marketing participant when such participant is penalized for prohibited acts in multi-level marketing activities;

g) Not implementing or improperly implementing regulations regarding the establishment of a training instructor list, retention of accompanying files, publication of the training instructor list on the enterprise's website, and notification to the Ministry of Industry and Trade;

h) Not implementing or improperly implementing regulations regarding updating the training instructor list on the enterprise's website and notification to the Ministry of Industry and Trade when there are changes in the training instructor list;

i) Not implementing or improperly implementing regulations regarding public display at the main office, branch offices, representative offices, and business locations of the enterprise of documents related to multi-level marketing activities and goods;

k) Not establishing and publishing prices for goods sold through multi-level marketing methods or not adhering to published prices;

l) Not monitoring the activities of multi-level marketing participants to ensure compliance with multi-level marketing participation contracts, operational rules, and reward plans;

m) Not implementing or improperly implementing regulations regarding registration of amendments or supplements to multi-level marketing operation content with the Department of Industry and Trade in cases prescribed by law;

n) Announcing the organization of meetings, seminars, or training sessions with the Department of Industry and Trade but not implementing them and not notifying the Department of Industry and Trade in writing as prescribed;

o) Not properly implementing procedures to adjust the confirmation of deposit documentation with the bank when there are changes in the information on the confirmation of deposit documentation;

p) Not properly implementing regulations regarding the deadline for procedures to extend the certificate of registration for multi-level marketing operations;

q) Not promptly notifying the issuing authority of the certificate of registration for multi-level marketing operations in cases where the information technology system managing the multi-level marketing network experiences malfunctions.

9. A fine of from VND 30,000,000 to VND 40,000,000 shall be imposed on a trader committing any of the following violations:

a) Organizing multi-level marketing activities in a province or centrally-administered city without a written registration confirmation issued by the provincial or centrally-administered city Department of Industry and Trade;

b) Not maintaining a local representative as required when there is no main office, branch office, or representative office in the locality;

c) Not implementing or improperly implementing regulations regarding the storage and presentation of documents related to multi-level marketing activities in the locality upon request by competent authorities;

d) Not implementing or improperly implementing regulations regarding notification to the Department of Industry and Trade when organizing meetings, seminars, or training sessions on multi-level marketing involving thirty or more people or ten or more multi-level marketing participants in the locality where the enterprise has been registered for multi-level marketing operations;

đ) Not cooperating with functional agencies during their process of overseeing, inspecting, and supervising meetings, seminars, or training sessions on multi-level marketing organized by the enterprise;

e) Paying a multi-level marketing participant the total value of commissions, bonuses, and other economic benefits, including those received under promotional programs, exceeding forty percent of the enterprise's multi-level marketing sales revenue in that year within one year;

g) Not paying commissions, bonuses, promotions, and other economic benefits to multi-level marketing participants in the form of bank transfers;

h) Not implementing or improperly implementing reporting obligations in multi-level marketing activities as prescribed by law;

i) Not entering into a multi-level marketing participation contract in writing with a multi-level marketing participant or a multi-level marketing participation contract that does not meet the prescribed formal requirements;

k) Not implementing or improperly implementing the obligation to pay a multi-level marketing participant commissions, bonuses, and other economic benefits that the participant is entitled to receive after termination of the contract;

l) Not implementing or improperly implementing basic training for multi-level marketing participants as prescribed by law or charging fees for basic training to multi-level marketing participants;

m) Not implementing or improperly implementing the issuance of membership cards to multi-level marketing participants as prescribed by law or charging fees for membership cards;

n) Designating training instructors who do not meet the conditions to conduct basic training for multi-level marketing participants of the enterprise;

o) Not properly implementing operational rules and reward plans as registered.

p) Not issuing invoices for each transaction with each direct selling participant of the enterprise or customers purchasing directly from the enterprise on a transaction-by-transaction basis;

q) Not operating an information technology system to manage the network of direct selling participants as prescribed;

r) Not operating or not regularly updating a Vietnamese-language website to provide information about the enterprise and its direct selling activities in compliance with regulations;

s) Not operating a communication system to receive and resolve inquiries and complaints from direct selling participants, including telephone, email, and reception addresses;

t) Not providing access to the management account of the information technology system managing the direct selling activities of the enterprise upon a written request from the competent state management agency responsible for direct selling activity management;

u) Organizing meetings, seminars, training sessions, or presentations about their own multi-level marketing business operations or those of other organizations or individuals without having obtained a registration certificate for direct selling activities;

ư) Not performing or performing incorrectly the responsibility of receiving, delivering, and sending goods according to the provisions of the law;

10. A fine of VND 40,000,000 to VND 50,000,000 shall be imposed on traders who commit any of the following violations:

a) Maintaining more than one direct selling participation contract, multi-level sales position, multi-level sales code, or equivalent forms for the same direct selling participant;

b) Implementing promotional activities using a multi-tiered network where participants have more than one position, code, or equivalent form within the promotion program;

c) Organizing intermediary trade activities in accordance with commercial law regulations to serve the maintenance, expansion, and development of the multi-level sales network;

d) Accepting applications or any other form of document from direct selling participants wherein such participants declare the abandonment of part or all of their rights under the law or allow the enterprise to be exempted from fulfilling obligations towards them as stipulated by the law;

đ) Not using the direct selling participant management system registered with the agency issuing the registration certificate for direct selling activities to manage direct selling participants;

e) Buying, selling, or transferring the network of direct selling participants to another enterprise, except in cases of acquisition, merger, or consolidation of enterprises;

g) Engaging in multi-level marketing business operations without a registration certificate for direct selling activities and profiting illegally up to VND 200,000,000 or causing losses to others up to VND 500,000,000;

h) Engaging in multi-level marketing business operations with prohibited entities as specified;

11. A fine twice the amount prescribed in Clause 10 of this Article shall be imposed on traders who commit any of the violations specified in Clause 10 of this Article if the violation is carried out across two provinces or centrally-administered cities or more;

12. Measures to remedy consequences

a) Compelling the return of unlawful profits gained from administrative violations as stipulated in Point a Clause 4, Points k, l, and m Clause 9, Points e, g, and h Clause 10 of this Article;

b) Compelling the correction of false or misleading information for violations as stipulated in Point b Clause 4 of this Article;

13. The authority responsible for imposing penalties for the violations specified in Clause 9 of this Article shall have the duty to notify the agency issuing the registration certificate for direct selling activities to consider applying measures to revoke the registration certificate for direct selling activities in accordance with the law.”

Article 2. Effective Date

1. This Decree shall take effect from November 25, 2018.

2. The provisions of this Decree shall be applied to handle violations that occurred before the effective date of this Decree as follows:

In cases where this Decree does not provide for legal liability or provides for lighter legal liability for violations that occurred before the effective date of this Decree but were discovered or are under consideration and resolution thereafter, this Decree shall apply.

Article 3. Responsibility for Implementation

The Ministers, Heads of ministerial-level agencies, Heads of government-attached agencies, Chairpersons of provincial People's Committees under central cities, and related organizations and individuals are responsible for implementing this Decree./.