Illegal multi-level business identification


Multi-level selling is a sales method recognized by Vietnamese law. Like other sales methods, the goal of multi-level selling is to bring goods from the producer directly to the consumer in order to satisfy the needs of the market. Multi-level selling activities have special characteristics that are different from other sales methods, that is, sales marketing is done by word of mouth, without advertising and marketing like traditional sales. In recent years, some objects have taken advantage of the multi-level selling model to gain illicit profits, causing damage to people, and causing frustration to society. To avoid engaging in illegal multi-level business activities, people should pay attention to the following issues:

I. Signs of illegal multi-level selling business

1. Multi-level sale enterprises do not have certificates of multi-level sale activities

– According to regulations, multi-level sale activities are conditional business activities and must be granted a certificate of registration of multi-level selling activities by the Ministry of Industry and Trade before being allowed to operate. – Therefore, when being introduced to participate in any multi-level marketing enterprise, participants need to check whether that business has been granted a certificate of registration of multi-level selling activities.

2. Enterprises doing business in multi-level sales with objects other than goods

– According to current regulations, multi-level selling activities are only allowed to be carried out for objects that are goods, all business activities by multi-level mode that are not goods sale and purchase are not legal. permitted by law. – Currently, there are many businesses operating with a reward model based on a multi-level model with a number of forms such as buying and selling cryptocurrencies, trading in educational services, calling for investment in digital currencies, etc. projects in which investors are rewarded according to the model of a multi-level network… These forms are prohibited from doing business in the multi-level mode, participants are not protected by law when facing risks. Therefore, people need to be careful and avoid participating in these businesses to limit unnecessary risks. Note: organizations and individuals that conduct business by the multi-level method without having been granted a certificate of registration of multi-level sale activities or doing business by the multi-level method with non-commodities may be administratively handled (up to VND 100 million for individuals and VND 200 million for organizations) or criminally handled with a fine of up to VND 5 billion or 5 years in prison (Article 217a of the Penal Code 2015 as amended). year 2017).

II. Signs to identify illegal multi-level marketing businesses

1. Requiring other people to deposit or pay a certain amount of money or to buy a certain amount of goods to participate in the system.

Illegal multi-level marketing businesses often entice participants to spend a sum of money to join the system, as an entry cost. This cost can be claimed in a variety of ways: – Request to pay for the procedure – Request to pay deposit – Request to buy a certain amount of goods (usually a product with a price higher than the market price or a package of products at a fixed price) – Request to pay for membership card – Request to pay for training materials – The collection of this money from the deceived person, the illegal multi-level selling enterprise will achieve 02 main goals: – Obtaining a sum of money from the lured person at no cost. If this person then does not continue to participate in seducing others, it is difficult to get this money back. – Making people who lose money become dependent on the company, leading to a situation where they are forced to entice and entice many other people to join in order to get their money back.

2. Allow participants to receive commissions from recruiting, referring others to participate in the multi-level sales network.

– As stated above, each participant in the nefarious multi-level system will usually lose an initial amount of money. This cost will be partly deducted by the enterprise to pay the referrer. The nefarious multi-level businesses still call this commission. However, this commission is not the result of sales activities, but comes from the money of the newly lured to join. – Therefore, if you are introduced to any multi-level marketing system that has a policy of paying commissions for recruitment, you need to be wary because it is a sign of illegal multi-level selling. – You need to understand: multi-level selling is a sales method, the seller receives a commission from his sales results and the sales results of the network of participants below him, not flowers. commission from recruitment.

3. Telling too much information to entice others to join

Exaggeratedly, false advertising is the basic form for nefarious multi-level sellers to attract new people, making them blind to unsavory information. The exaggeration of the illegal multi-level seller can be expressed in many different forms:
– Overstatement of the opportunity to get rich: people who are lured into participating in illegal multi-level enterprises often hear advertisements about the possibility of getting rich quickly after a while participating in the network. Members of the nefarious multi-level enterprise will paint scenes of wealth, give rich examples that have been successful in the business, or show themselves rich with flashy clothing. Illegal multi-level enterprises also often organize massive honoring events, giving honorees with bonuses worth hundreds of millions, even billions of dong to make those sitting below believe that they will do the same. However, this information is actually fake, the people who come to receive the reward often only wear the crossband with a large amount of money but are not given the amount of money as the face value on their ribbon, or the amount is the reward amount of the entire system of thousands of people, not their own. The gullible will probably trust and invest a lot of money to get such success quickly.
– Exaggerating product use: Illegal multi-level businesses often advertise their products as divine products, which can cure serious diseases such as cancer. They give real examples through pictures, even video clips presented by patients. However, the images on this clip are staged, not real.
– Exaggerating about the size and strength of enterprises: many illegal multi-level enterprises are just enterprises established by Vietnamese people, using the same name as a foreign enterprise, but in order to gain the trust of others, they often advertise them as a multinational enterprise, operating in many countries around the world, with factories, headquarters, and offices in many different countries. This form of exaggeration is often aimed at people with limited awareness, thinking that they are working for an international business, feeling proud and increasingly confident that they are not deceived.

4. No goods or goods of no value, quality

– The nefarious multi-level enterprises focus only on recruiting new people to collect money and not interested in buying and selling of goods, so they often do not have goods or have but only cheap, rudimentary goods. to act as a front for collection activities. – These businesses often entice participants to pay money, issue invoices but do not deliver goods. To disguise this, they often have participants sign documents such as return orders, stock release slips, or stamp “goods received” on invoices issued to payers. – Some businesses have delivery but the goods are of very low value compared to the amount collected from the participants, for example, functional foods produced in the country, household appliances originating in China sold for millions of dollars. , even tens of millions of dong.
– After a period of time, the payer is not paid the commission as promised. If they want to claim the money back, they can’t get it back because the documents show they have received the goods, or the sale has been done on the basis of Although it is expensive, the buyer has agreed to spend money to buy it, so it cannot be claimed back. Note: in the process of monitoring the activities of multi-level selling enterprises, in case there are questions or detection of illegal acts of multi-level selling enterprises such as the following signs: As mentioned above, people or participants in multi-level sales should provide information and evidence to: Department of Trade and Industry Protection – Ministry of Industry and Trade (No. 25 Ngo Quyen, Hoan Kiem, Hanoi; Email address: .vn; Phone: 024.2220.5002) so that the Department of CIT and Consumer Protection has grounds to consider and handle violations. All information of complainants and denunciators is kept confidential in accordance with the law. Source: Department of Competition and Consumer Protection

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