Vietnam trade ministry tightens control over multi-level marketing

The Ministry of Industry and Trade (MoIT) is tightening its control of multi-level marketing and pyramid selling in Vietnam with regular inspections of their legal compliance, according to the ministry’s National Competition Commission.

Through inspections, authorities have detected and applied sanctions for many violations, and revoked multi-level marketing (MLM) registration certificates from more than 20 businesses, said the commission.

It said that in 2023 alone, the ministry inspected six businesses and imposed fines of VND1.1 billion ($43,280) on five of them and one individual.

Information about handling violations in MLM activities has been publicized, it added.

The commission has urged licensed MLM businesses to promote management solutions that have proven effective in recent times, while carrying out inspections to improve their compliance with the law.

Vietnam now has 20 businesses with active MLM registration certificates, down significantly from 67 in 2016. In 2023, 768,283 people engaged in MLM activities, generating a total revenue of VND16,866 billion ($663.62 million).

Total commissions and economic benefits paid to participants reached VND5,846 billion ($230 million), while about VND2,255 billion ($88.73 million) in taxes was paid to the state budget.

According to the MoIT, official MLM activities are carried out in accordance with laws. In recent times, the National Assembly, the government, and relevant ministries have established a strict management mechanism for this business through a system of legal documents and specialized management agencies.

MLM businesses need to register with the MoIT and be managed by the ministry and relevant specialized sectors such as investment and planning, health, and public security, the ministry noted.

In recent years, the ministry has drastically and synchronously deployed solutions to manage MLM activities from central to local levels, including dissemination of legal regulations on MLM, giving warnings about signs of illegal MLM, closely controlling licensed MLM businesses, and increasing inspections.

The government has submitted a proposal to the National Assembly to supplement Article 217a of the 2017 Penal Code on violations of regulations on managing multi-level marketing activities, creating a legal basis to early detect and handle fraud cases that take advantage of this model, and avoiding oversized damage, according to the ministry.