Up to 23 multi-level or pyramid scheme marketing companies in Vietnam halted operations with two out them having their business licenses revoked by the end of September this year from a total of 77 licensed firms.
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| Up to 90% of pyramid scheme marketing companies involved nutritional supplements |
According to the HCM City Department of Industry and Trade, most violating firms had been fined, as the withdrawal of their license had to follow regulations set out in Decree 110 issued in 2005 which was due for to revision.
The Ministry of Industry and Trade’s Competition Management Agency said that multi-level marketing had strongly developed in Vietnam.
Statistics showed that up to 90% of these businesses were involved nutritional supplements, while the rest concentrated on cosmetics, fashion, household goods, sports and physiotherapy and fitness equipment.
Due to the huge potential profits, many companies violate the regulations by asking their network participants to contribute money and then pay commission as a way to encourage them to lure other people into the pyramid scheme. A number of companies also misrepresent their products through their advertising.
Over the past years, Vietnam has illegally operated pyramid schemes including those run by Golden Rock, Colony Invest and Diamond Holiday and the most recently case of Mua Ban 24.
Head of the Competition Management Agency Bach Van Mung said he had proposed revising some of the regulations found in Decree 110/2005 on multi-level marketing management. He noted that the decree should require higher deposits and force companies to inform management agencies of their business expansion into other localities.
