Right multi-level marketing would not be prevented in terms of legislation

On settling this matter, we should focus on handling more complicated issues such as anti-deceiving activities, and use of multi-level marketing to mobilize financial sources, particularly internet based activities (Ponzi operations)

Multi-level marketing has been escalating over the past time in Viet Nam. However, various violations arose during the boosting of this kind of marketing. Could you name some causes of this? Are there many loopholes in terms of legislation in managing multi-level marketing?

There are 3 main causes leading to offences in multi-level marketing activities. Firstly, capacity of competent authorities at the central and local levels is still poor. Secondly, the legal framework has not been completed. Thirdly, persons who join multi-level marketing have a wrong perception of the nature and the benefits of such an activity.

Over the last 6 months, the Ministry of Industry and Trade has coordinated with provincial people’s committees and provincial departments of industry and trade to concentrate on addressing the three aforesaid causes. Thus, the situation has changed in a positive way. Breaches in multi-level marketing have been significantly reduced. Nevertheless, a new form of violation which uses multi-level models to mobilize finance, e.g. illusory money offering, offering illusory projects to attract investment is emerging…These activities are banned in terms of legislation so they can be treated in a criminal proceeding.

Some people said that when competent authorities inspected multi-level marketing activities, they identified violations everywhere. So, should we encourage this kind of trading anymore?

If multi-level marketing activities operate in a right way, they will not be prevented in terms of legislation. The activities are not encouraged in the legal framework because this kind of trading is only allowed when it satisfies certain conditions. The conditions should be completed in the coming time. Companies would not be discouraged if they fully meet conditions as regulated. However, activities of using multi-level models to mobilize finance are prohibited in the legislation. We should have punishment regulations to treat violations in a timely and stricter manner.

It is said that the Ministry of Industry and Trade is leading the drafting of a decree to replace Decree No. 42/2014/ND-CP on multi-level marketing management. Is this a useful tool to put multi-level marketing in the legal framework?

When we proposed that the Ministry of Industry and Trade issue Order No. 02 on reinforcement of multi-level marketing management, we realized the problems relating to Decree No. 42 on management methods. Therefore, Order No. 02 aims to reach more comprehensive management methods which connect functional forces and especially draw attention to transparency and publicity in supervision and control activities.

The drafted decree replacing Decree No. 42 will be submitted to the Government before the end of this year. On the basis of Order No. 02 implementation experience, there would be plenty of contents to be adjusted or amended to ensure that whenever multi-level marketing companies are granted permits, they cannot make use of the permits to conduct unlawful activities. The mechanism among related agencies and forces would be clarified to assure effectiveness and efficiency in State management, especially in the phase of supervision and control.

It is fair to say that multi-level marketing management is not easy at all but not so difficult. The proof which can be shown is that thanks to the governmental agencies’ recent effort and coordination, the phenomenon of disorder in multi-level marketing has decreased. So, I believe that the amended decree would be certainly a useful tool to put multi-level marketing in order. The hardest task is to detect and treat the acts of using multi-level models to mobilize financial sources, particularly in an internet environment. Because the acts are now not covered in the decree on multi-level marketing and not under the Industry and Trade’s management, it is difficult to expect the new decree to stop these acts

As you said, Decree 42 was produced to manage actual multi-level marketing but not to manage distorted activities such as Ponzi, financial mobilization…So, how can we manage such activities?

As I said, it is not so difficult to manage multi-level marketing as its right meaning. If we have a more completed legal framework, we can ensure an environment for healthy multi-level marketing development. After dealing with the legal issue, we should focus on settling a more difficult issue. That is to prevent and fight against deceiving acts, usage of multi-level models for financial mobilization, particularly internet based activities (ponzi operations). Although this is not the Ministry of Industry and Trade’s function, we would direct the Vietnam Competition Authority and provincial departments of industry and trade to coordinate with functional agencies in this matter, raising local staff’s capacity in violation detection at the same time.

The VietNam Competition Authority would invite international experts to VietNam for sharing experience in early detection and settlement of distorted activities such as ponzi operations. On the other hand, information dissemination to identify multi-level marketing and ponzi operations should be strengthened. The dissemination methods should be changed, e.g. attracting involvement of the Youth Union in delivering leaflets to universities or making use of communes’ broadcasting facilities to disseminate information to retired persons...

How would participants’ benefits be protected when companies’ violations are detected?

For participants in right multi-level marketing, their benefits would be protected before the legislation. For persons joining in false multi-level marketing activities, i.e. giving their money to multi-level marketing companies to play financial games, their benefits would not be protected. In order to receive protection, these people should use other legal instruments, particularly the Civil law or the Criminal Law. That means they should report to the Police with evidence of being cheated.

Thank you!