Penalties for violating sales promotion laws

Wednesday, Jul 08, 2015 08:00

Enterprises violating the law while engaging in promotional activities may face administrative penalties and/or additional sanctions. — Photo xaluan
Enterprises violating the law while engaging in promotional activities may face administrative penalties and/or additional sanctions. They will be required to take remedial measures or suspend promotional activities, depending on the severity of their act.

Administrative penalties

According to Decree No 185/2013/ND-CP that provides the penalties for administrative violations in commercial activities, the production of and trading in counterfeit or banned goods and protection of consumer rights, fines ranging from VND10 million to VND50 million shall be imposed on the violating enterprises, contingent on the levels of violations. Specifically:

A fine between VND10 million (US$460.8) and VND20 million ($921.6) shall be applied on acts of violation such as: failed or improper compliance with provisions on methods of announcing information that are required to be publicly notified when conducting sales promotions; failure to publicly organise a prize draw for a promotion of chance or holding one without the presence of customers; or failure to inform competent authorities of promotions of chance whose total prize value is VND100 million ($4,608 ) and above.

Enterprises shall be fined VND20 million to VND30 million if they commit more severe violations, such as employing third parties to carry out promotional activities without an agreement; false content submitted to state authorities; or promotional discounts exceeding the permissible level of discount as prescribed by law.

Breach of the prohibitory regulations shall result in a fine of VND30 million to VND50 million. This includes promotion of banned goods or services; dishonest or perplexing promotional activities with the purpose of deceiving customers; and promotion of consumption of unqualified goods that are detrimental to the environment and human health or contrary to the culture, ethics, habits and customs of Viet Nam.

The aforementioned fines shall be doubled in case the violations are carried out in two or more provinces or cities under the central authority.

Representative offices, who independently conduct sales promotions or hire another company to do so, shall be fined VND10 million to VND20 million if they violate sales promotion regulations.

A financial penalty of VND60 million to VND80 million shall be imposed on enterprises whose promotional activities are implemented for the purpose of unfair competition, specifically:

Fraudulent prize promotions;

Untruthful sales promotions or ones that deceive customers by giving a false impression about the promoted goods or services;

Discrimination towards customers at different locations during the same sales promotion;

Trial goods are offered to customers in exchange of those of the same type produced by other enterprises that they are currently using.

The fine mentioned above shall be increased to VND80 million to VND100 million if the violations are committed in two or more provinces or cities under the central authority. Simultaneously, the exhibits, the means used to commit acts of violation and the profits earned from such acts shall be confiscated from the breaching enterprise. A public rectification must also be filed.

Suspension of promotional activities and confiscation of exhibits

Part of or the entire promotion may be suspended when violations such as implementation of prohibited acts or failed or insufficient compliance with the promotion's rules registered with competent authorities, are committed.

Even when their promotional activities are suspended, enterprises are obliged to fulfil all commitments made to customers who joined such activities, except in cases where the entire promotion is required to be suspended and all exhibits are confiscated;

Use of unqualified goods and services or those prohibited or restricted from business or not allowed to be circulated or supplied;

Promotion or use of liquor and beer for promotion among citizens under 18;

Promotion or use of tobacco and liquor with alcohol content of 30 or more for promotion, and use of medicines for any form of promotion.

Remedial measures

Forced destruction of promoted goods or goods used to promote other goods and services banned or restricted from business, goods not permitted to be circulated, services not permitted to be supplied, or unqualified goods as provided for by law.

Forced cancellation of previously drawn prizes and re-organisation of a new prize draw in case the former ones weren't held in public or held without the presence of customers or about which the competent authorities were not informed when the total value of prizes of the promotion was VND100 million or more.

Forced submission of illegal profits gained from collecting fees by providing customers with sample products or trial services and from failure to remit 50 per cent of the announced prizes' value to the state budget, in case no winner is found. —  PLF — LAW FIRM

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