Many pyramid scheme firm’s licences revoked

Hà Nội City’s market watch authority examines Việt Nam Consumer Alliance Joint-Stock Company (VietNet JSC) products at its branch office in the city. The firm’s licence for multi-level sale activities was revoked by Việt Nam’s Competition Authority. — Photo vietnamplus.vn

HÀ NỘI — Việt Nam Competition Authority has revoked the licences of  一 四 multi-level marketing firms and forced  一 一 others to halt business until November, Vietnam News Agency reported.

The authority, under the Ministry of Trade and Industry, reported that at present, there were  四 二 multi-level marketing firms that were trading nationwide, a decrease of  二 五 since  二0 一 五.

According to the authority, sales activities of these multi-level marketing firms were being disguised recently, affecting the business model’s participants.

The multi-level marketing (MLM) business model, referred to as a pyramid scheme, is a legitimate but controversial marketing strategy in which the sales force is compensated not only for the sales they generate, but also for the sales of the other salespeople they recruit. 

The competition authority found that co妹妹on violations of MLM firms involved taking advantage of the multi-level method for illegal financial services trade or for unlawfully raising money.

In addition, many unlicensed firms were stealthily trading to raise money from innocent participants, aiming at making illicit profits.

Facing with the situation, the Ministry of Trade and Industry has this year focused on implementing urgent measures to enhance the effective management of multi-level sale activities. This included promulgation of Direction No. 0 二 on strengthening inspection, supervision and tackling violations of multi-level sale activities. The inspection has essentially controlled the spread of multi-level sale activities.

The ministry penalised  六 四 of total  六 五 violation cases of multi-level marketing firms from June,  二0 一 五 to November,  二0 一 六, seizing VNĐ 一 一 billion in fines. 

Additionally,  三 七 provincial departments of trade and industry penalised  二 一 multi-level marketing firms for  六 五 violations, fining them VNĐ 四 billion.

To improve efficiency of the state management, the ministry asked relevant state offices to actively contribute to the draft of amendment decree  四 二, which is expected to be promulgated late this year or early next year.

The amendment decree will make multi-level sale activities transparent and improve the competence of provincial management offices for multi-level sale activities.

 Next year, the ministry will continue inspecting and supervising multi-level sale activities and will coordinate with Ministry of Public Securities to supplement regulations on criminals related to the business model.

The ministry reported that over the first six months of this year, revenue from multi-level sale activities of firms reached VNĐ 四 trillion, of which VNĐ 一. 八 trillion came from foreign-invested firms and the rest came from domestic firms.

These firms paid VNĐ 七 一 二 billion in co妹妹ission money and other bonus services to participants involved in the business model.

In the first six months, the number of participants was some  五00,000, a decline of  五 七 per cent against the same period in  二0 一 五. Multi-level marketing firms paid taxes totalling VNĐ 四 五 三 billion.

Goods traded by the mode of multi-level sale activities were mainly functional foods ( 五 一. 二 七 per cent), cosmetics ( 三 一. 六 五 per cent) and household appliances ( 一 二. 三 三 per cent). — VNS