Vietnam MLM News: Ministry of Industry and Trade Completes Draft Decree On Multi-Level Marketing To Replace 2005 Law

The Ministry of Industry and Trade has completed a draft decree on multi-level marketing (MLM) to replace an old one dating back to 2005.

According to a report submitted to the government compiled by the ministry, the old decree had many shortcomings and failed to take into account some specific areas typical of Vietnam’s market.

Tu-i Tr- news

“The new draft decree on multi-level marketing companies is a step forward in managing the complex development of MLM firms in Vietnam,” said the ministry.

According to the draft of the new law, the principle is not to prohibit MLM operations, but to tighten operating conditions to limit possible frauds which will adversely affect the community.

The new draft decree prohibits many acts defined in multi-level marketing, including running MLM businesses with additional services (unless otherwise permitted by law), signing many contracts with one person, and inciting employees to perform unlawful behaviors.

In addition, the ministry has also proposed the government to stop allowing municipal departments of industry and trade to license MLM firms. Every MLM company that wants to join the market must gain approval from the Ministry of Industry and Trade.

“This aims at preventing MLM firms from attaining a license from local authorities with little management experience; or at fixing the fact that many cannot establish their branches or expand further.”

The MLM companies will have time-limited licenses and have to re-register every 5 years.

In particular, MLM companies will have a minimum chartered capital of VND10 billion (US$470,000). Besides, they will have to deposit VND5 billion at authorized state agencies instead of the current rate of VND3 billion to increase their accountability.

The multi-level marketing companies will also have to regularly submit the reports on their operations to the local authorities.

The new draft decree also requires MLM companies to notify the local departments of trade and industry about the time and venue of their workshops, conferences, and sales training sessions, as most MLM firms often take advantage of those events to expand their networks.

The draft regulation also requires MLM companies not to charge the participants for basic training sessions, except for a reasonable expense on training materials.



UPDATED : 08/18/2013 15:00 GMT + 7

International MLM News: Australian Regulatory Body Sets Sites on Social Media

A recent ruling by Australia’s Advertising Standards Bureau raises questions about the use of, and potential issues related to, social media marketing. In its ruling, the Bureau stated companies are responsible for the content posted to social media pages promoting their brands, including material and content posted by users or friends of the account. The Bureau found that companies are required to monitor their pages and related-to posts to make sure such posts aren’t misleading or defamatory and are in compliance with advertising decency standards as set forth by the Australian government.

This decision highlights how different countries are approaching social media advertising standards and the lack of consensus among global regulatory bodies over what constitutes advertising versus free speech. Just last month a decision was reached by the U.S. National Advertising Division (NAD) of the Better Business Bureau, in which the NAD reviewed a Pinterest board maintained by weight loss company NutriSystem and determined the weight-loss success stories “pinned” to the board represented consumer testimonials and required the complete disclosure of material information.

Within the direct sales channel, like virtually all industries, the use of social media continues to be pervasive. With such online activity, the use of social media platforms such as Facebook, Pinterest and Twitter will continue to be more highly scrutinized by regulatory bodies and it is important that companies educate their independent distributors about what is and what is not permissible when using social media. Additionally, it is essential that executives stay abreast of new regulatory developments as the use of social media becomes more and more widespread so as to best protect their companies from future action by regulatory bodies.

MLM News: Direct Selling News Reports European Countries Are Easing Their Direct Selling Laws Causing Huge Gains For Distributors

One of my favorite industry magazines is Direct Selling News. Their new online European version is really shedding light on the growth potential for companies in Europe.

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