Unlicensed multilevel marketing schemes thrive on social media

By Anh Minh   August 30, 2019 | 05:00 pm PT
Unlicensed multilevel marketing schemes thrive on social media
Multilevel marketing businesses use Facebook, YouTube and other media channels to promote their products. Photo by Shutterstock/Jirsak.
Some companies in Vietnam are using Facebook and YouTube to lure members for unapproved multilevel marketing schemes.

The Ministry of Industry and Trade’s competition and consumer protection department said for the last two months it has been receiving reports from consumers about being invited to join online pyramid schemes that sell healthcare products.

Within this month, the department has given out three warnings to consumers against joining three companies that operate multilevel marketing business model as they have not been authorized to operate in the country.

These businesses use Facebook, YouTube and other media channels to promote their products by offering high commissions to people who can invite more people to join their network.

One of them, Jeunesse, said in a YouTube video that a member could earn up to VND2.3 billion ($99,000) if they have enough lower levels of sellers.

Another called Vital Group advertises that it would award the first 2,000 members a passive income of up to VND100 million ($4,300) a month if they introduce its products to more buyers.

The third company, Atomy, said it is in the process of acquiring permit for multilevel marketing in Vietnam but some individuals are taking advantage of the brand to sell products.

Authorities are having difficulties managing multilevel marketing online. Tran Huu Linh, head of the market surveillance under the trade ministry, said at a recent meeting that officials usually have to spend time staying undercover to investigate if these companies actually use pyramid schemes in disguise.

In recent years, a number of companies in Vietnam have operated pyramid schemes under the guise of multilevel marketing, taking money from tens of thousands of people and leaving them in the lurch.

The trade ministry in May said it received business termination requests from two Hanoi companies as they report poor business results. It also revoked the business licenses of five other companies that did not comply with Vietnam’s laws on multilevel marketing.

There are 23 authorized multilevel marking companies operating in Vietnam, according to the competition and consumers protection department.

A person conducting illegal multilevel marking activities in the country could face fine up to VND5 billion ($215,000) or five years in jail.

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