5 years of imprisonment for multi-level businesses without a permit

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the National Assembly has officially passed the Law amending and supplementing a number of articles of the Penal Code 2015, taking effect from 1st January 2018. Photo: The Internet.

According to the Vietnam Competition Administration Department (the Ministry of Industry and Trade), the National Assembly has officially passed the Law amending and supplementing a number of articles of the Penal Code 2015, taking effect from 1st January 2018. Thus, the procedure-based agency shall have a basis to handle the use of multi-level trading methods to illegally raise capital.

Specifically, in accordance with Article 217a on the violations on business by multi-level mode, individuals who organize business activities in a multi-level mode without a certificate of registration of multi-level sales activities or operating in contravention of the contents of registration certificates may be subject to a fine of up to 5 billion vnd and a maximum of 5 years of imprisonment

In the case where offenders show signs of deceptive property appropriation, they shall be handled according to Article 174 of the Penal Code on frauds for the appropriation of property. In the case where offenders use elements of computer networks, telecommunication networks or electronic means, they shall be handled according to Article 290 of the Penal Code for the crime of using computer networks, telecommunication networks, and electronic means.

According to the Ministry of Industry and Trade, by the end of April 2017, after the authorities ended the multi-level sales activities of Thien Ngoc Minh Uy Co., Ltd, the number of participants dropped to 472,000 people, a decrease of 44% compared to the end of 2015.

According to the data reported by enterprises, total sales of multi-level sales in 2016 reached about 7,800 billion vnd, a decrease of 200 billion vnd compared to 2015 (a decrease of 2.5%).

The fact has shown that in many cases, the Ministry of Industry and Trade found that the damage was mainly due to ignorance of participants in multi-level sales. Almost all complaints received by regulators are from participants in the multi-level sales system but they have no sales activity, simply give money to others and hope to receive money with a high-interest rate.

In particular, 100% of the profit agreements are verbal agreements, not recorded in writing so when the dispute occurs, the authorities have absolutely no evidence to handle.

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The contribution of multi-level sales businesses in generating income and employment is unclear. Of the nearly 640,000 people participating in multi-level sales, only a small percentage are actual sellers. The rest have not sold anything. Multi-level sales are heavily based on supplementary food and cosmetics (83% of sales, with supplementary food accounting for 59%).