Hanoi tightens crackdown on ‘pyramid schemes’

10:03 | 01/04/2020 Economy- Society

(VEN) - The Hanoi People’s Committee recently promulgated a multi-level marketing management regulation in its continuing effort to curtail fraudulent and illegal “pyramid schemes”.

hanoi tightens crackdown on pyramid schemes

Fines and workshops

As of late February 2020, 19 multi-level marketing businesses were operating in Hanoi, mostly trading in food supplements, cosmetics and home appliances. Some 54,500 people were involved in this type of marketing in Hanoi in 2019, down 27 percent compared to 2018.

Nguyen Thanh Hai, Deputy Director of the Hanoi Department of Industry and Trade said that in 2019, the department handled 400 profiles and organized more than 600 meetings, seminars and workshops on multi-level marketing and issued decrees on dealing with multi-level marketing law violators. Hanoi authorities also issued fines totaling VND640 million to violators.

The efforts have helped control illegal multi-level marketing in the city, Hai said. However, authorities have encountered difficulties as multi-level marketing has become more evasive, adopting different forms and expanding throughout provinces and cities nationwide, he said.

Apart from multi-level marketing of goods, multi-level marketing related to capital investment in projects, training courses and electronic wallets has also been detected in Hanoi. That kind of multi-level marketing is not described in Government Decree 40/2018/ND-CP (governing multi-level marketing of goods), making it difficult for authorities to control.

Sophisticated evasion tactics

Hai said authorities have failed to detect and sanction sophisticated cases where violators do not trade in real goods, and/or use digital technology and e-commerce to avoid investigation and prosecution.

On December 16, 2019, the Hanoi People’s Committee issued Decision 27/2019/QD-UBND on cooperation in multi-level marketing control, replacing the regulation issued in 2015. Hai said that apart from clarifying the responsibilities of the Department of Industry and Trade, the city police, the Department of Health, the Department of Foreign Affairs, and people’s committees of districts and towns as described in the 2015 regulation, the 2019 regulation states responsibilities, functions and tasks of other city authorities. These include the market management authority, the Hanoi Department of Taxation, the Hanoi Department of Information and Communications, Department of Planning and Investment, Department of Agriculture and Rural Development, Department of Science and Technology, Department of Culture and Sports and the Hanoi Inspectorate.

According to the new regulation, departments, agencies and sectors detect, inspect, investigate and deal with cases of multi-level marketing law violation in their respective fields. The 2019 regulation clarifies tasks and responsibilities of the State Bank of Vietnam’s branches in Ho Chi Minh City and Hanoi in blocking bank accounts to prevent violators from dispersing their assets, creating favorable conditions for relevant authorities and forces to investigate, handle and confiscate assets related to illegal multi-level marketing.

The Hanoi People’s Committee has instructed relevant departments, agencies, sectors, and district people’s committees to work closely in multi-level marketing management and send biannual and yearly reports to the Department of Industry and Trade for submission to the city people’s committee.

Nguyen Duyen