Nghị định 141/2018/NĐ-CP sửa đổi các Nghị định quy định về xử lý vi phạm pháp luật trong hoạt động kinh doanh theo phương thức đa cấp

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”)

1. Article 36 of the Decree No. 71/2014/ND-CP is amended as follows:

“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.

2. A fine twice as much as the fine for an administrative violation prescribed in Clause 1 of this Article shall be imposed if such violation is found to involve two provinces or central-affiliated cities or more.

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.

2. A fine ranging from VND 5,000,000 to VND 10,000,000 shall be imposed upon a participant in the MLM for one of the following violations:

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.

5. A fine ranging from VND 20,000,000 to VND 25,000,000 shall be imposed upon an individual for participation in the MLM network of an organization or individual that fails to obtain the MLM registration certificate.

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;

g) Failing to comply with or improperly implementing the regulation that the MLM company must make and publish the list of trainers on its website, submit the one to the Ministry of Industry and Trade, and keep relevant documents;

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.

9. A fine ranging from VND 30,000,000 to VND 40,000,000 shall be imposed upon a trader for committing one of the following violations:

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;

k) Failing to fulfill or improperly fulfilling the duty to make payment of commissions, bonuses and other economic benefits which a participant is entitled to receive during his/her participation in the company's MLM network after terminating the MLM contract signed with that participant;

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;

u) Organizing conferences, meetings, training courses or introduction of its MLM network or the MLM network of another organization or individual without obtaining the MLM registration certificate;

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;

h) Using the MLM strategy to trade or sell a subject other than the permitted subjects as regulated.

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.

Article 3. Implementation

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./.

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