Herbalife Vietnam fined $8,000 for violating multi-level marketing rules

The National Competition Commission has fined Herbalife Vietnam, a U.S-invested dietary supplement company, VND205 million (over $8,000) for its violations in multi-level marketing.

According to a decision by the commission, Herbalife Vietnam, headquartered at No. 26 Tran Cao Van street, District 3, Ho Chi Minh City, was fined for “not implementing or improperly implementing basic training for multi-level marketing participants according to the law”.

Specifically, Herbalife Vietnam did not carry out basic training for 16,208 multi-level marketing participants, including 1,647 with contracts still valid as of September 30, 2024.

The company appointed trainers who did not meet the conditions to conduct basic training. It also failed to comply with registered operating rules and compensation plans.

Herbalife also improperly implemented reporting obligations in multi-level marketing activities required by the law.

Six of the company's cosmetic products display information on packages that does not have full reference sources. The information needs to be presented more clearly and completely, the commission noted.

The authorities require Herbalife Vietnam to conduct basic training for the 1,647 multi-level marketing participants by September 30, 2024.

It must review the internal system, ensuring that the completion time of the basic training is recorded accurately and consistently among documents regardless of delays in updating system information.

The information on the product label must be adjusted to ensure it is given clearly and with full reference sources.

There must be a mechanism to accurately calculate the proportion of revenue from customers who are not multi-level marketing participants, the commission stressed.

Entering Vietnam in 2009, Herbalife Vietnam is a company under Herbalife Nutrition Group. In Asia, Vietnam is this U.S. company’s third largest market, after India and China.

Herbalife recorded net sales of $75.6 million in Vietnam in Q1/2024, up by $4.5 million or 6.3% year-on-year.

It earned $279 million from net sales in the country in 2023, down 6.7%, according to the firm’s reports. With the performance, Vietnam was among the biggest Asia-Pacific markets for Herbalife. India was the largest with $796.6 million, up 17.6% year-on-year; followed by China with $327.4 million, down 16.3%.

The National Competition Commission also discovered a series of violations at Perfect Global Co., Ltd. in District 1, HCMC.

This company signed contracts on multi-level marketing participation that did not include all the required basic content, and did not notify the Ministry of Industry and Trade on time when there were changes in the list of trainers.

Perfect Global also did not notify the local Department of Industry and Trade when organizing conferences, seminars and training in cases where notification is required per regulations.

It did not carry out procedures to amend and supplement its registration certificate for multi-level marketing activities.

The multi-level marketing enterprise was fined VND215 million (over $8,400) for its violations.

The National Competition Commission also issued a decision to fine Vinalink Group VND95 million for not complying with registered operating rules and failure to monitor the activities of multi-level marketing participants to ensure they comply with the company’s operating rules.

This firm is headquartered at Lot C16/D21, Cau Giay New Urban Area, Dich Vong Hau street, Cau Giay district, Hanoi.