When committing violations in promotional activities, businesses may be subject to administrative sanctions, remedial measures, additional fines, and suspension of promotional activities depending on the severity of their actions.
Today, the market for providing goods and services is booming. Besides wholesale, retail business activities are also emphasized because of the high-profit margins these yields. Accompanying policies and demand stimulation activities are implemented in many forms and pose many potential risks for consumers or service users.
According to the provisions of Vietnamese Law, specifically Article 100 of the Commercial Law 2005, Article 35 of the Law on Prevention of Harmful Effects of Alcohol and Beer 2019, Decree No. 98/2020/ND-CP and Decree No. 17/2022/ND-CP regulate prohibited acts in promotional activities and handling measures as follows:
1. Prohibited acts in promotional activities
Enterprises need to pay attention to prohibited behaviors in promotional activities including:
- Promotion for goods and services banned from business; goods and services with restricted business; goods have not been allowed to circulate and services have not been allowed to be provided.
- Using goods and services used for promotion that are banned from business; goods and services with restricted business; goods have not been allowed to circulate and services have not been allowed to be provided.
- Advertisement or use of alcoholic drinks (alcohol and beer) for promotion to people under 18 years of age.
- Promotion or use of cigarettes, wine, and beer with an alcohol content of 15% or more for promotion in any form.
- Untruthful or misleading promotions about goods and services to deceive customers.
- Promotion to consume poor quality goods, causing harm to the environment, human health, and other public benefits.
- Promotions at schools, hospitals, headquarters of state agencies, political organizations, socio-political organizations, and people’s armed units.
- Promising gifts or rewards, which are not delivered or performing improperly.
- Promotions aimed at unfair competition.
- Carry out promotions where the value of goods or services used for promotion exceeds the maximum limit or reduce the price of promoted goods or services beyond the maximum limit as prescribed.
2. Consequences for violating promotion regulations
Administrative responsibilities
Depending on the severity of the violation, the fine level for enterprises violating promotion regulations is as follows:
- Fines from 5 to VND 10 million for certain following violations:
- Failure to implement, incomplete implementation, or improper implementation of regulations on providing and publicizing information about promotional activities when conducting promotions;
- Collect fees, charges, and money from customers or require customers to fulfill any other payment obligations when carrying out promotions of giving samples or providing sample services for customers to try.;
- Do not publicly organize the prize drawing of promotional programs of chance or organize the prize drawing of promotional programs of chance without the presence of customers or without making a record of the organization of the prize drawing;
- Committing other acts as prescribed by the Law.
- Fines from 10 to VND 20 million for certain following violations:
- Carry out promotions for goods and services without being a trader who according to regulations has the right to carry out promotions for those goods and services;
- Carrying out promotions for the goods and services of other traders without a stipulated promotional service contract or hiring a trader providing promotional services to carry out promotions for their goods and services without there is a promotional service contract according to regulations;
- Failure to notify or notify amendments (collectively referred to as notification) or fail to register or register modifications (collectively referred to as registration) with competent state management agencies according to regulations when conducting promotions or notification or registration is not true to reality;
- Failure to notify or report the results of promotion implementation according to regulations or notification or report not by regulations (except for the case specified in Clause 1a of this Article) or the content of notification and report is not true economic;
- Committing other acts as prescribed by the Law.
- Fine from 20 to VND 30 million for certain following violations:
- Promotion for goods and services banned from business goods and services with restricted business; goods not yet allowed to circulate, services not yet allowed to be provided; alcohol, lotteries, cigarettes, breast milk substitutes, human medicines, including medicines that have been permitted for circulation according to regulations of the Ministry of Health (except for promotions for drug traders), medical examination and treatment services of public medical establishments, educational services of public establishments, public vocational education establishments, goods and services banned from circulation in Vietnam or goods, other services are prohibited from promotion according to the provisions of Law;
- Using goods and services used for promotion that are banned from business; goods and services with restricted business; Goods not yet allowed to circulate, services not yet allowed to be provided; alcohol, lotteries, cigarettes, human medicines, including medicines that have been allowed to be circulated according to regulations of the Ministry of Health (except for promotions for drug traders), prohibited goods and services from circulation in Vietnam and other prohibited promotional goods and services according to the provisions of law;
- Committing other acts as prescribed by the Law.
Thus, the highest fine for violations of business promotion is VND 30 million.
In addition, enterprises may be subject to additional penalties of confiscation of exhibits for some specific violations or be subject to the following remedial measures:
- Forced destruction of exhibits that are goods and items harmful to human health, livestock, crops, and the environment, and cultural products with toxic content;
- Forced to return illegal profits obtained from promotional violations.
Civil Responsibilities
In case enterprises conduct promotional activities and cause damage, they must compensate the actual damages incurred to the damaged person according to the provisions of Article 584 of the Civil Code (2015).
Thus, violations of promotional activities cause enterprises to suffer legal consequences. Furthermore, violating promotional activities can lead to tax risks and business reputation. Therefore, enterprises need to be careful and comply with legal regulations when conducting trade promotions in the form of promotions to enhance consumer trust and maintain brand image.
